David English
March 1, 2008    Source: Studio Monthly

The heady mix of brand-spanking-new facilities, skilled local talent, and budget-friendly tax breaks makes a compelling case for moving your production to LA (Louisiana that is).

It may be the worst kept secret in Hollywood. Louisiana is now the third most popular region of the country for movie productions, after Los Angeles and New York. A total of 53 major productions were completed in 2007, including theatrical features, movie-of-the-week projects and television pilots. The state’s Office of Entertainment Industry Development estimates that $500 million from motion picture production budgets was spent in Louisiana during 2007. "There has been a 5,000-percent growth rate since 2002," explains Sherri McConnell, entertainment industry director for Louisiana Economic Development.

Why the rush to move productions to Louisiana? It can’t be just the food and culture. The main reason is the state’s aggressive tax credits that lower the bottom line in production and infrastructure costs. "It’s the elephant in the room," says Kevin Murphy, director of studio operations for Raleigh Studios Baton Rouge. "You can’t ignore the fact it’s a vital ingredient."

The tax incentives are substantial. "On the infrastructure side, you’re talking 40 percent," says McConnell. "It’s basically 40 percent off your in-state expenses." Infrastructure includes studio facilities you build in the state. In addition, if you base your production in the state, you can receive a 25-percent tax credit that’s applied to your in-state expenses exceeding $300,000. And for that portion of the expenses that go for Louisiana residents hired for the production, you can take another 10 percent off your taxes."
Imagine 40, 35 or 25 cents back in your pocket for each dollar spent. That’s a big advantage for independent projects, as well as Hollywood blockbusters. And it’s real money, not just a carryover credit for your tax return. "If you don’t have a Louisiana state tax liability, or you want to monetize it, you can transfer it, which means you can sell it," explains McConnell.

Ramping Up
Raleigh Studios will be able to take advantage— directly or indirectly— of all three tax credits. Currently under construction in Baton Rouge, the $45 million Celtic Media Centre rental facilities will start with 11,000 square feet of stage space, 6,000 square feet of office space and 4,000 square feet of post production space. Future plans include adding 130,000 square feet for production and 68,000 square feet for offices. Raleigh Studios has three similar rental studios in Southern California, and the Baton Rouge facilities will be equal in quality and support.

In addition to qualifying for the 40-percent infrastructure tax credit, Celtic Media Centre can turn around and rent the facilities to production companies that qualify for the 25-percent and 10-percent credits, whether it’s for film production, video production, sound recording or editing.

Murphy says U.S. productions that used to go to Toronto and Vancouver are moving to Louisiana, because the exchange rate isn’t as favorable as it used to be. Also many secondary costs are less in Louisiana. "If you take a script with any budget, compared with L.A. or Canada, you’re looking at about 20 percent right off the top," he explains. "That’s 20 percent off the total budget. You save on the cost of utilities, rentals of certain kinds, below-the-line rates for some crew members, housing and other goods and services."

Many of the lower costs are related to the transitory nature of film and video production. "Those things have to be well planned, because you don’t have ten years to think about it over a long lease," says Murphy. "You’ve got four months. You’ve got six months. You’ve got a week. You start a business, and you take it down. You start a business, and you take it down. A lot of your costs are in startups and teardowns."

Despite the savings, many projects will choose to remain in Hollywood. "If somebody is going to shoot in Los Angeles, they’re going to shoot in Los Angeles," says Murphy. "They have the budget. It could be star issues. Or it could be a lot of other logistics. They come here because they can make a better movie for the amount of money they’re allocated."

Another large rental studio facility— the Nims Center in New Orleans— has already hosted an impressive roster of movie productions, including Ray, All the King’s Men, Déjà Vu, Last Holiday, Runaway Jury, Glory Road and upcoming The Curious Case of Benjamin Button. "I think the lowest budget film we ever had here was Ray, and it was maybe $45 to $50 million," says Roger Benischek, director of the Nims Center. Nims grew out of a collaboration with various state and city departments and the University— another example of how New Orleans cannily invested early in it’s film economy, creating a facility that’s built to serve a high-level film production client.

The Nims Center is planning to expand its 37,000 square feet of soundstage space with an additional 20,000 square feet. The current space is configured with fixed soundstages of 7,000, 10,000 and 20,000 square feet, while the new space would feature a single 20,000 square foot soundstage. "When people come through here, that’s the size stage they want," says Benischek. "They don’t want anything less than 20,000 usually. That’s why we will be going with one stage rather than a stage that would be variable. There are so many sound problems when you divide a stage up. You can’t usually have two clients in there because they conflict."

Getting Creative
The tax credits are also proving to be a boon for production and post-production companies that are already located in Louisiana. Based in Baton Rouge, Digital FX is a production company with its own post-production facility. "There are actually three companies here," explains Greg Milneck, president of Digital FX. "Digital FX is primarily a post-production facility, but our primary client is one of my other companies. We produce mostly commercial work, but we also do a lot of visual effects work." Digital FX has won numerous awards over its 27 years, including 14 Emmys.

Milneck currently has 10 full-time staff members— mostly animators and editors. Depending on the workload, he might hire anywhere from 2 to 50 freelancers. "We’re in the planning stages right now of a major expansion where we will double the facilities and double the staff," he says. The expansion is centered around his purchase of one of the first Red One cameras. "We’re going to build a complete 4K workflow," he explains. "We have a 2K edit suite right now that can handle 4K, but we’re going to build a pipeline so a film could come in here, and they could shoot their whole project on 4K. Or they could shoot on 35mm and scan it to 4K or 2K. Then we could grade it, edit it and do the whole process until it goes back out to film."

Does Milneck anticipate shifting his current work to 4k? "Right now, realistically, we’re probably going to work in 2K. We’re building a 4K pipeline, but we’re building it for the future," he says. He had held off switching to HD until the timing seemed right. "I watched the national ads, and for every 20 commercials, there might have been one HD commercial. There just wasn’t a demand for HD, so we waited. We were fortunate, because now we’ve jumped from 720p and the two 1080s, and we jumped straight to 4K."

As with Raleigh Studios Baton Rouge and the Nims Center, Digital FX will benefit from both the infrastructure and production incentives. "I have a production company that can take advantage of the tax credits, but really what we’re gearing this facility for is so our clients can take advantage of the credits by using our facilities," he explains. "If we have a production that’s certifiable, then we would take advantage of it if we were the producers. But we also want to bring in other productions that can receive the credit by using our services."

Swelltone Labs is another well-established post-production company that’s able to take advantage of the tax credits. Based in New Orleans just three blocks from the French Quarter, Swelltone specializes in sound editing and re-recording for feature films and documentaries. Credits include all of Steven Soderbergh’s movies since his career-launching Sex, Lies, and Videotape.

Because audio is stored digitally, being based far from Hollywood hasn’t been a problem for Swelltone. "We have DigiDelivery, so it usually goes over the Internet," explains Billy Theriot, Swelltone’s assistant sound editor. "DigiDelivery is Digidesign’s version of a server. It’s very secure, and you almost can’t interrupt it. You can pull the cords, unplug the thing, power it back on, and it will continue right where it was going."

When the media files are larger, they’re often delivered on a hard drive. "We’ll get 50, 60 or 100 gigabytes of stuff, which would take days to download," says Theriot. "The same goes with the final delivery of the movie. Every version, every part of the whole film, is stored on one drive."

Some of the audio work can’t be done from the facilities in New Orleans. Founder and owner, Larry Blake, usually becomes involved with a production during shooting. "He’ll have people on the set recording background sounds of the environments that they’re in, or background sounds of environments they want to convey," says Theriot. "For Oceans Thirteen, Larry had a couple of guys at the casinos. Once the picture is cut, and it’s locked, and we get the picture, that’s when we really kick in full time here, working on sound effects, Foley and dialogue editing— all the way through. Once a picture is locked, that’s when the facility here gets pretty busy. Before that, it’s basically sounds effects gathering."

Timing is Key
If you’re thinking about moving your own production to Louisiana, you may want to do it sooner rather than later. The tax credits aren’t meant to be permanent. They’re short-lived to encourage a buildup of facilities and skilled workforce. "Our ultimate goal is to create an industry that’s self-sustaining," says McConnell. "We want to build those jobs from the ground up and provide careers for kids who are now in grade school and high school. We don’t want to be dependent on Los Angeles sending productions here."

Whether the increased production flow can be sustained over the long run is anyone’s guess, though it has clearly been a success in the short run. "I see it as a person who lives here," says Milneck. "We went out for dinner last weekend at a plantation in a remote area. We pulled up, and the whole place was lit up like daylight with a parking lot full of trailers. In the course of that evening, we ran across three film crews."

In addition to his reviews for this magazine, contributing editor David English evaluates software and hardware for CNET.com and Computer Shopper magazine.