03/21/2017
Spending from state's film industry mainly benefits NYC, report finds. The film industry has spent $12.5 billion and created 70,000 jobs since 2014.
Despite the $1.45 billion in incentives given throughout the state, upstate has yet to see a big production boom.
By Miriam Kreinin Souccar , Crains New York
A month after Gov. Andrew Cuomo proposed a three-year extension of the $420 million annual film tax credit, the state released its biennial economic impact study of the entertainment industry. The report shows a net positive effect, with more tax revenue received than reimbursed, but it also underscored that the benefits are concentrated almost entirely in the city.
The New York State Film Tax Credit Program Biennial Report, prepared by Camoin Associates from data provided by Empire State Development, is a requirement of the lucrative film tax credit program. It was distributed Feb. 7 to the state Legislature and shared exclusively with Crain's.
The state found that New York gave out nearly $1.45 billion in incentives during 2015 and 2016. In exchange, the state, New York City and other local jurisdictions received $1.5 billion in tax revenue.
Film and TV productions have been flocking to New York since the tax credit was first implemented in 2004 and have been increasing in numbers, creating an estimated 70,000 jobs in the past two years. State tax revenue increased more than 22%. Total spending jumped 28% to $12.5 billion—$6.5 billion in direct spending, such as on rent and props, and an estimated $6 billion in indirect spending on local services including dry cleaners and caterers.
"The film industry is not only booming, it's also driving billions of dollars into our local economy and creating more jobs than ever before," said Howard Zemsky, ESD president and chief executive.
One finding in the report that is likely to rankle constituencies upstate, however, was the major gulf between the amount of filming taking place in New York City compared with the rest of the state.
More than 90% of production spending occurred in the city, the report said. As a result, counties outside of the metropolitan area received only a 9-cent return for every $1 invested in the production credit.
Part of the problem is that upstate lacks the vast filming infrastructure that has been built up in and around New York City. Property owners have been investing millions of dollars to build soundstages in the city. Silvercup Studios, for example, opened a $35 million facility last year in the South Bronx, while Kaufman Astoria Studios in Queens broke ground on two new soundstages last week, bringing its total number to 12.
The demand is great. "We're at capacity now all the time," said Scott Levy, president and founder of Eastern Effects in Brooklyn, a lighting supplier.
The impact from the tax program for the postproduction industry is an area where the benefits have been less compelling. In 2013 the state allocated $25 million of the annual tax credit to postproduction work in the city—even if the movie or TV show was filmed out of state. Postproduction work includes editing and visual effects.
The state found that every $1 spent on the postproduction tax credit generated 97 cents. Film executives said that was because the credit is relatively new and the industry is still in its infancy. Indeed, state tax revenue from postproduction work jumped 51% in 2015–2016 from the previous two-year period; city revenue was up 62%.
The ESD study's findings conflict with a study released last week by the Post New York Alliance trade group. That study found that postproduction work for film and television generates $128 million each year in state tax revenue, or a net gain to New York of $103 million annually.
Alliance chairwoman Yana Collins Lehman said the ESD study doesn't show the full picture. "This ROI equation doesn't include the millions of dollars in expansion that post facilities have spent in recent years, the permanent real estate costs of providing full-time employment and benefits to thousands of New Yorkers, or most of the jobs the postproduction facilities support," she said.
