By Theresa Agovino Source …
Pam Williams was in Louisiana shooting a movie last summer, wondering if the rumors were true. Would New York state expand its postproduction tax credit so the cost of finishing the film in the city would essentially be equal to completing it in Louisiana, which offers rich incentives to the industry? In late July 2012, she got the answer she wanted: The New York credit would be enhanced.
“We were so excited when it passed,” said Ms. Williams, the producer of The Butler, a film about an African-American man who served seven presidents. “We really wanted to do the work here in New York.”
Ms. Williams is not alone. Postproduction work is booming in New York City since last July. That’s when the state increased the postproduction tax credit to 30%, from 10%, for any movie or television show that does 75% of its postproduction in the state, no matter where the filming occurred. (The credit jumps to 35% in upstate New York.) Since last year, 60 productions have applied for the credit, more than triple the number that applied in the previous two years, when the credit was less generous.
In March, New York sweetened the deal: Movies or shows that filmed 75% of the project in New York City get a 30% tax credit (35% upstate) regardless of how much postproduction work is done here.
The lure is even greater for productions using local firms for animation and visual effects. They have to spend only 20% of their visual-effects budget or $3 million, whichever is less, to get the 30% credit.
The move has been a call to action for postproduction companies, which have been adding staff and leasing more space to accommodate the demand. In fact, the city’s postproduction industry has become so robust that at least two shops from Hollywood have opened offices in New York City. Post NY Alliance, an industry trade group, estimates that 75 postproduction projects in the state could translate to $183 million of economic activity.
“It’s been crazy; the phones just don’t stop ringing,” said Eric Robertson, president of Mr. X Gotham, which specializes in visual effects. He opened the company last August, and staffing has jumped to 36 people from two in less than a year.
The state, which launched a tax credit for film production in 2004, opted to expand the program to postproduction because of its success. The film industry adds $7.1 billion annually to the city’s economy and has created 130,000 jobs, according to city officials.
In the 2012-2013 TV season, 26 prime-time series were shot in New York City—compared with seven 10 years ago—and 21 hourlong dramas were filmed here, a 37% increase over the previous season.
“We wanted to diversify the film and TV industry beyond just production, which has been so successful,” said Kenneth Adams, president and chief executive of Empire State Development, the state’s chief economic development agency.
Though some see tax credits for major film companies as an example of corporate welfare, others say the breaks are necessary to compete with other cities and states offering such enticements.
Indeed, even with all the production work going on in the city, films and TV shows were still getting their finishing touches—such as editing, color correction, special effects and sound mixing—done elsewhere either because it was cheaper or the facilities were better.
Michael Cioni, who founded Hollywood-based postproduction company Light Iron with his brother Peter in 2009, noticed that many productions shot in New York were being finished by Los Angeles-based firms. He believed that if he opened a state-of-the-art facility in New York, he could capture some of the business that was being exported. Light Iron opened its Manhattan office in May and already has 12 employees.
“I would say the tax credit was a motivating factor to make the move more quickly,” said Mr. Cioni. “But we’d be here anyway.”
Zak Tucker, president of Harbor Picture Co., agrees that there was a need for more postproduction companies in a city with so much filming. He said that although technology can make it easier to shoot in one place and have the film sent elsewhere for editing or effects, it doesn’t always create the best product.
“Doing everything from start to finish in one place helps with workflow, efficiency, creativity,” said Mr. Tucker.
He leased one floor of 185 Varick St. last year and took over a second earlier this year when he started offering sound-editing services to complement the firm’s visual-editing services. During the past two years, the staff has tripled to 30, and he is looking to add another 20,000 square feet in either Manhattan or Brooklyn.
Of course, tax credits can’t solve every problem. Rents in New York are high, and production budgets are shrinking as more consumers go online to watch movies and television shows. Technology has also made it easier for amateurs to produce films meant to be viewed online with lower production values.
Even so, Mr. Tucker figures his firm will attract enough high-end customers. “To the extent that people care about producing a quality product, there will be a place for us,” he said.
The tax credits make it that much easier for producers to choose New York. Louisiana’s postproduction studios are cheaper, for example, but the talent pool is not as deep as it is in New York City or Los Angeles, according to Ms. Williams, the producer. To produce the best film and save money, she was willing to transport and house nonlocals in Louisiana. But when New York expanded the tax credit, the need for airfare and hotel rooms was eliminated, putting the city on a par with the Bayou State.
And then there are the benefits that money can’t buy. “Our director is from New York,” she said. “People like to sleep in their own beds.”
A version of this article appears in the July 15, 2013, print issue of Crain’s New York Business