U.S. Is Looking Better Close Up

By Richard Verrier

April 16, 2005 12 AM PT

Times Staff Writer

Zane Zidel planned to film his low-budget horror flick “Coil” in Canada.

But with the dollar sagging, the price of staying in the U.S. to film isn’t so scary. Rhode Island now looks good. So does Louisiana.

“It used to be if you wanted to save money, you went to Canada,” Zidel said. “Now, I’m looking at other options.”

Zidel strolled through the Santa Monica Civic Auditorium on Friday afternoon, carrying five bags stuffed with sales pitches from states and countries. All were vying for his business at the annual Locations Trade Show held by the Assn. of Film Commissioners International.

Some 180 film commissioners from 33 countries came to the three-day convention, which ends Sunday, hoping to fill their treasuries with some of the money that film crews spend when they shoot on location.

But credit the weaker dollar for changing the nature of the runaway-production problem that has plagued California for more than 20 years.

Shooting in film-friendly countries such as Canada, Australia and Ireland is more expensive. At the same time, states including New Mexico and Louisiana are moving in for a slice of the production pie, offering tax breaks and other financial incentives.

“What the states figured out is that when the dollar was so low, it was the time to strike because less production would go to Canada and it had to go somewhere else,” said Steve MacDonald, president of Entertainment Industry Development Corp., which issues film permits in Los Angeles.

Seizing on the development, more than a dozen state legislatures are developing tax incentives to lure production.

New Mexico, where the upcoming Adam Sandler movie “The Longest Yard” was filmed, is one of the most aggressive. The state has seen its film production mushroom from $8 million three years ago to $120 million last year. Producers of the TV series “Wildfire” recently chose to shoot in Albuquerque instead of Vancouver.

“The higher Canadian dollar has helped us tremendously,” said Lisa Strout, director of New Mexico’s film office. “It used to be it wasn’t so much of a battle. It was, ‘I need desert; I need location.’ Now it’s all about money and these incentives.”

Gov. Arnold Schwarzenegger has promised to fight runaway production and is reportedly working on an incentive program. But proposals for state financial sweeteners have historically been a tough sell in Sacramento, where some legislators have criticized them as unnecessary giveaways.

On Friday, representatives from 38 states showed up in Santa Monica to make their pitches. New York officials flew in fresh bagels, which they placed near a large, furry King Kong doll wrapped around a cardboard cutout of the Empire State Building. Utah offered bobblehead dolls.

Although L.A. remains by far the world’s film capital, runaway production has eaten away at the business. Studies have estimated that runaway production costs the U.S. about $3 billion directly and about $10 billion overall when the losses ripple through the economy.

Three years ago, it was the cheap foreign locales, especially Canada, that enjoyed the upper hand.

One U.S. dollar then was worth about 1.60 Canadian dollars. Now it’s just 1.25 Canadian.

Filming in many overseas areas still remains cheaper than in the U.S. The TV shows “Smallville” and “Kojak” shoot in Canada, which also lured feature films including “Antarctica” and “Cheaper by the Dozen 2.”

But the gap is closing to the point that it’s not such an easy call for studios and producers.

“The playing field has changed absolutely,” Australian Film Commissioner Tracey Montgomery said.

Countries that previously enticed movie and TV producers with the promise of favorable exchange rates now must work harder, often throwing in extra sweeteners and services.

“You can’t sit back and hope people are going to come because you have a wonderful location and great people,” said Joan Miller, film commissioner for northern Vancouver Island.

On Wednesday, the Australian government announced plans to extend a 12.5% film tax rebate to include big-budget TV series.

Late last year, after protests in Toronto over job losses, the Canadian province of Ontario raised its labor tax credits on production of foreign films from 11% to 18%. Quebec, British Columbia, Nova Scotia and Manitoba followed suit with similar sweeteners. Toronto guaranteed that city services would be charged at an exchange rate of 78 U.S. cents to 1 Canadian dollar through 2005.

“We want the business here -- that’s the message,” said Rhonda Silverstone, commissioner at the Toronto Film and Television Office.

With countries and states competing so hard, it’s filmmakers such as Zidel who eventually win.

“When I’m making a $16-million movie,” Zidel said, “I’m looking for whoever is going to bend over backwards the most.”