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VOL. 128 | NO. 25 | Wednesday, February 6, 2013

Funding Film

Officials continue analyzing state film incentives, challenges

By Andy Meek

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A prominent Republican state senator recently asked the state Department of Economic and Community Development to make sure and take the call if the department gets a ring from Molly Mickler Smith, the daughter of FedEx founder Frederick W. Smith.

There is hope more film opportunities such as “Nashville,” filming of which takes place in the capital city, will open up in Tennessee as state officials continue analyzing the film incentives available.

(Photo Courtesy of American Broadcasting Companies, Inc.)

She is producing a movie adaptation of the Tony-award winning Broadway smash “Memphis: The Musical.”

Tennessee Senate Majority Leader Mark Norris’ request to state officials wasn’t because he assumed they’d ignore her call. Instead, his request reflects a continued interest at all levels of government in Tennessee to make sure the state remains competitive in the never-ending arms race to attract entertainment productions of all kinds.

Filmmakers and industry representatives from around the state have for several years lamented more attention going to states like Georgia and Louisiana that have comparatively showered filmmakers and production companies with gobs of money.

Lawmakers and economic development officials, along with film industry representatives, have been slowly working to change that dynamic. When asked point-blank if he felt good about the state’s film incentive structure and the state’s competitiveness at the moment, Norris did not hesitate.

“Yes, I do feel good about it,” he said. “There is some additional funding in the budget that is proposed for next year for this industry, so I think the Department of Economic and Community Development also sees the benefit of it.”

He also distinguishes the way the state’s film incentives work now with how they did under the prior administration.

A report from auditors in the state comptroller’s office released at the end of January, for example, showed that the desire to make Tennessee more competitive in the entertainment world sometimes resulted in exuberance that veered a bit off track.

Vincent Finamore, an auditor in the comptroller’s office, sat at a table in front of a joint legislative committee on Jan. 28 and recited many of the key findings in the comptroller’s report. At one point during the hearing that lasted for more than an hour, a legislator interrupted him and asked if he believed the state’s film incentive program has thus far fulfilled its mission.

Finamore hesitated.

“As I present the findings, I think I’ll give a picture … to answer your question,” Finamore replied.

With no change in the tone of his voice, he continued reading:

“The Department of Economic and Community Development and the Department of Revenue have disregarded their statutory responsibility and exercised poor management and administrative oversight of the state’s headquarters film incentive program,” Finamore read.

According to a summary of the report, “Auditors could find little to no evidence the incentives have led to new film-producing facilities or permanent film jobs in Tennessee.

“In 2006, the General Assembly passed laws giving the film commission authority to provide certain financial incentives to attract movie production companies to the state. However, auditors questioned whether the incentives provided have been properly determined and whether certain incentives intended for filmmaking facilities located in Tennessee have been improperly awarded to out-of-state businesses. The auditors found that incentive payments were based on expenditures that did not always meet the program’s guidelines or have adequate supporting documentation.”

According to the news website TNReport.com, millions of public dollars went into the state’s film incentive program in the past to aid productions like “Hannah Montana: The Movie” and “Larry the Cable Guy’s Christmas Special.”

In fact, a review by TNRreport of state records from 2008 to 2012 shows the state will have spent more than $22 million on Hollywood productions made in the state.

There have been varying degrees of success. One of the most recent examples is the ABC drama “Nashville,” which state officials say is bringing in millions in economic development – not to mention major brand recognition for the state.

Following the release of the comptroller’s report, state officials say changes have been made and the incentives will be more transparent from here on out.

“I don’t think it’s been made sufficiently clear that these problems in the comptroller’s report were problems from the previous administration, which we have now addressed,” Norris said. “What we’re currently doing is working pretty darn well. This is one of the reasons I wanted to do away with the tax incentive component of it. Because as I looked – I wasn’t aware of the audit at first – but as I looked at whether we were competitive or not in our region … it became apparent that the tax credits were gummed up in the department of revenue, and it was just a cumbersome thing that wasn’t working very well.

“As we looked into it, we said we need to just do away with that and get that out of there anyway. So that’s what we did.”

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