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Posted: June 04, 2013

Lights! Camera! Inaction!

Sides drawn over state-funded film incentives

Gigi Sukin

In 1974, author Stephen King found a change of scenery for his next book project by opening an atlas and randomly pointing to Boulder.

King and his wife, Tabitha, took the advice of some helpful locals and stayed at the imposing Stanley Hotel at the base of Rocky Mountain National Park – a setting that ultimately inspired his horror novel, The Shining.

It’s no wonder many people believe the hotel is haunted. The 1997 television mini-series version of The Shining was filmed there, and reports of supernatural activity brought in the Syfy Channel’s hit show Ghost Hunters. About 80,000 of the Stanley’s 350,000 annual visitors pay for ghost tours.

“It would be fair to say that the publicity, the movies, the mini-series as well as other TV shows have absolutely helped the hotel thrive,” says Daniel Swanson, the Stanley’s vice president of e-commerce. “It’s been a real revenue driver for us.”

The Stanley’s story serves as a testament to the potential of film and television projects to boost Colorado’s economic activity, job creation and tourism.

A 2011 University of Colorado Leeds School of Business economic analysis of a Colorado film incentive program found that every dollar invested in film and television brings $5 in production spending and nearly $10 in economic activity.

After the state hired Hollywood producer Donald Zuckerman as director of the Office of Film, Television and Media in 2011, he persuaded lawmakers to fund a $4 million rebate and loan guarantee incentive program. Zuckerman then landed three films, a Coors commercial, post-production work and three TV series.

State Rep. Mark Ferrandino (D-Denver) says the film incentive program, while modest by national standards, produces big results: more than $41 million in economic activity, 376 direct jobs, 195 indirect jobs and an estimated 515 part-time jobs.

“The pros definitely outweigh the cons,” he says.

But not everyone is so quick to roll out the red carpet.

In April, the Colorado legislature’s Joint Budget Committee rejected a House-approved request to increase the film office’s funding by $1.5 million.

“Generally the opponents think it’s corporate welfare or money not well spent that could have gone elsewhere,” Zuckerman says.

Sen. Kent Lambert (R-Colorado Springs) voted against the request, citing reports that cast doubt on the incentive’s supposed return on investment. He expressed further concern that the entertainment lobby is serving an already profitable industry, the Denver Post reported following the decision.

“The State government should treat all businesses equally; no subsidies for one specific industry,” says Linda Gorman, a former academic economist and the director of Health Care Policy at the Independence Institute, a Golden-based free market think-tank. “I’m against corporate welfare, and that’s what film and television incentive programs are. Just because you’re shooting a film here shouldn’t mean that you are so much more important than the team manufacturing a local product.”

Gorman also expressed doubts about ROI, citing a Boston Globe report that Massachusetts received only 16 cents back for every dollar of its $44 million tax credit program.

“It’s highly unlikely that Colorado will ever have a program of that magnitude,” says Brian Lewandowski, a research associate with the Leeds School of Business, referring to the tens of millions of dollars states such as Louisiana and Michigan have doled out in recent years to lure producers.

Still, Gorman and other opponents worry about the aggressive lobby, tax increases and potentially negative impact on the business environment.

“You have to be careful; we’re not a state with a mobile tax base, and even big manufacturing industries can be moved,” Gorman says. “Colorado has been attractive to businesses because it’s a nice place to live, but people are not willing to pay infinite amounts for that. Not giving any special tax breaks keeps the tax environment simple.”

But Lewandowski argues that tax credits can be beneficial. He cites the case of Arrow Electronics Inc., a Fortune 500 electronic component distribution company that moved to Denver in 2011 after the Colorado Economic Development Commission approved tax credits of as much as $11.4 million over five years for the creation of 11,700 jobs.

“The state has modest funding to use in incentive packages to help lure qualifying businesses to the state. When a company decides to relocate, incentive programs often underlie those moves,” Lewandowski says. “There’s the idea that Arrow brings a lot of indirect company growth with it. It’s important to remind people it’s the same concept with film.”

Before states began offering film incentives, Colorado’s inherent advantages – natural beauty, outstanding work force and creative capital – made it a hotbed of production.

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Gigi Sukin is an Associate Editor at ColoradoBiz. She can be reached at gsukin@cobizmag.com.

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