Does NC need to entice filmmakers with incentives? | Eastern North Carolina Now

    Publisher's Note: This post appears here courtesy of the Carolina Journal. The author of this post is Theresa Opeka.

    Fayetteville native Brian Tyree Henry was among those nominated for an Oscar in this year's 95th Annual Academy Awards. He was recognized for his role as James in the film "Causeway." Also nominated this year, University of North Carolina School of the Arts alum William Files, who is part of a team nominated in the best sound category for his work on "The Batman." Other UNCSA alumni also worked on nominated films.

    While Sunday evening's 2023 Academy Awards might have been a disappointment for these nominees, North Carolina's picturesque backdrops and talented people put the Tar Heel State on many Hollywood lists. North Carolina has long been known as one of the states with the perfect setting for many productions. But are incentives really needed for film crews to come here? It all depends on whom you ask.

    This week, H.B. 301 was filed in the General Assembly that would modify the state's film and entertainment grant.

    Currently, to qualify for a financial rebate from the state of up to 25% on qualified expenses, a television series must average an in-state spend of at least $500,000 per episode, a feature-length film must spend at least $1.5 million, made-for-television movies must spend at least $500,000, and a commercial production must have a minimum spend of at least $250,000.

    The new bill dropped the requirement for a feature-length film to $500,000.

    The current incentives cap the rebate payout for feature films at 25% of in-state spending. Under the new legislation, the rebate would be raised to 35% if at least 75% of the filming of the production and where crew, cast, and offices of the production are both located in tier one and tier two areas, as defined 28 in G.S. 143B-437.08, or more than 25% of the qualifying expenses for any other production.

    A press release out Friday by the North Carolina Department of Commerce shows that filmmakers spent more than $258 million on productions in the state in 2022, the sixth highest year-end total since 2000 when the state started offering incentives to support the state's film industry.

    The release mentions that 74 film, television, and streaming projects, had production-related activities in all eight of the state's prosperity zones, and that included 17 grant awardees.

    "Our film industry is an economic multiplier for North Carolina," said N.C. Commerce Secretary Machelle Baker Sanders. "These projects not only provide thousands of job opportunities for our talented workforce, but they also support the small business communities surrounding every production set, positively impacting the local economies where they film."

    But is lowering the threshold for movie production or having grant incentives really necessary at all, given that only 17 out of 74 were awarded grants last year?

    "The fact of the matter is filmmakers come to North Carolina not because of film grants but because of North Carolina's wide range of natural features, diverse climate, rural to urban settings, mountainous to coastal terrain, and good production infrastructure," said Jon Sanders, director of the Center for Food, Power, and Life and research editor at the John Locke Foundation. "Record production years despite the grant amount having remained the same offer more proof of that. North Carolina was "Hollywood East" long, long before lawmakers approved the first film incentive. As with other economic incentives, it would be wiser to get North Carolina out of film grants altogether."

    As Sanders has previously pointed out, films like Dirty Dancing (filmed at Lake Lure), Sleeping with the Enemy (filmed in various locations including Kure Beach, Wrightsville Beach, and Wilmington), or Bull Durham (yes, filmed in Durham) all have one thing in common: They were all filmed before incentives were offered.

    John Charles Bradbury, a professor of economics at Kennesaw State University, Georgia, wrote a paper for Western Carolina University in 2019 on what film incentives mean for North Carolina's economy. He concluded that film incentives do not help with improved economic outcomes.

    "Cost-benefit analyses estimate that North Carolina's return on investment from its film subsidies ranges from twenty-two to sixty-one cents on the dollar, with most estimates closer to the lower end of that range," he said. "These North Carolina estimates are consistent with the estimates of negative returns in other states. North Carolina's film incentives, which have cost the state over $400 million, do not appear to have delivered the promised economic boost. For this reason, policymakers may wish to reconsider the state's commitment to the incentives."

    So, while films like "A Biltmore Christmas," filmed at The Biltmore and approved for a grant up to $1,087,500, will be exciting to see on the Hallmark Channel's "Countdown to Christmas" later this year, many still make the point that numerous film and TV productions still want to come to the Old North State, the true star of the show, with or without incentives.