WRITE THE REGULATIONS

We have yet to write the regulations or consolidate and eliminate conflicts in the two main pieces of legislation passed in the 2010 session. To date there has been no opportunity for public comment and no rules have been adopted. We have been operating on opinion letters issued by NM Taxation and Revenue in response to requests from interested parties. This leads to confusion and the perception that certain clients are treated differently from others. While some have told me that the studios are not concerned with such matters as the payout, that is not what were hearing on the ground. There is still intense speculation on how much money a company can expect to receive and when the final payout will happen. It is possible to read into the law that, for a major motion picture, it could take almost 6 years for the final check, with a best case scenario of at least 4 years. On TV series, our most important clients, there could be a lag of 8 or more years if a pilot was picked up and did a run of 60 or more episodes. This policy is not practical and will be a major deterrent for television production. There are also questions about when the clock would start, what constitutes a taxable year or a tax year, and when the approval process is complete. There remain concerns about such mundane matters as an audit or what constitutes an employee and a vendor. We still have not addressed the definition of a local business and if that business needs at least one local employee (as SB44 requires). We (Local 480) have spent a considerable amount of time, effort, and money on consolidating SB44 and the two House bills that were put together in what has been called the compromise. There are surprisingly few conflicts and the amalgamated bill makes a great deal of sense. It gives us a really good jumping off point for a regulatory discussion. Since these bills were passed and signed, we have learned of the challenges they present and the loopholes that were opened. The loophole big enough to drive a grip truck through allows a vendors employees regardless of their domicile - to be considered New Mexicans for rebate purposes. This is contrary to both the spirit and, in our view, the letter of the law. We expect this to be addressed as a priority. While we are creating cleanup language, we should look to the confusing definitions of an LLC, actors withholding, and what exactly qualifies for the rebate. As long as these things are not clear, we risk losing business (and in fact probably have already). We also believe that, to honor the original legislative intent, a cost of living increase to the $50 million target needs to be incorporated; we would ask that it be back-dated to July 1, 2011. We also believe that strong projects for possible lenders would encourage a secondary market in advances against the rebate and we are urging that the cleanup bill include assignability language.

PAGE 1

FILM 2013 A SIMPLE PLAN

WE ALL NEED TO MARKET

We all need to consider marketing one of our main tasks. The state film office budget has been dramatically reduced and the small staff is obliged to deal with issues such as the rebate and other regulatory requirements, so it is understandable that marketing will fall to the bottom of the pile. If we as an industry put a concerted effort into keeping New Mexico in every conversation, we can be of great assistance to the state and to ourselves. Im directing much of this to those of us who work full time in the business, but everyone can participate. If youre one of the 20+ film liaisons around the state, contact your local newspaper and see if it would like a column or some information given to its beat writers. There are many industry-specific blogs that will publish pretty much any pertinent information. We should post to Facebook any good news or interesting rumors. We should look to have one source where we can all put our information out there. Why is that important? We need to maintain the chatter and buzz about New Mexico; search engines work on volume so its up to us to create that volume. ( While Im on the subject, Im always disappointed to see derogatory Facebook postings especially about the Governor that ship has sailed. We need her support and that of others in her administration including the film office. I dont believe calling her names or dwelling on past actions will encourage enthusiastic engagement with those who work for her. We really need to encourage those fixated in the past to constructively engage for the future.) Working with the film office when appropriate on such things as marketing, training, and support for New Mexico film makers will serve us much better in the long run. Similarly, working with the State Tourism Department to help maximize film tourism opportunities will work wonders in supporting a higher economic impact.

PAGE 2

FILM 2013 A SIMPLE PLAN

HELP THE COMPARISON SHOPPERS

I feel this is the time to look at our entire incentive structure compared to our competition. There are many misconceptions about what we have, but there are many more about what others have. Frankly, we are still in the top five. Our system is still one of the easiest to grasp (once weve written down and published the regulations, of course) and still 25% cash/check, not a credit or some other instrument that must be monetized. Our rolling target has been misinterpreted as a cap but even then $50 million is a substantial sum, especially per head of population when compared to New York, California, Pennsylvania, Florida, or other large states. Clearly we are at a disadvantage compared to Louisiana, Georgia, and North Carolina but thats about it. These states are looking at their programs and if they cant justify the total cost I strongly believe the industry will come back to us. In the case of LA and NC they are already having this discussion. 25% makes financial sense; anything over becomes harder to justify. We talk about Utah but it has a cap per picture and total funding of around $9 million per annum. Colorado has $2 million; Texas has $15 million per year. Michigan has $25 million per year. Oklahoma, Alabama, and other states with a percentage require shooting in certain areas and using certain percentages of local crew that make it difficult if not impossible to calculate the rebate up front. One of our recent competitors, Michigan, has gone to a pre-approval grantbased system that has already awarded pretty much all of the money for next year. Its important that when a picture company is making a decision it looks at all this info and adds in the assets that New Mexico has spent years building. Our crew and vendor base, and our infrastructure, especially our studios, are unmatched even by Los Angeles standards. There is not a day when I dont get a call from another state inquiring if we have crew available to send to fill in the considerable gaps they all have. North Carolina, Georgia and Louisiana already bring in technicians at the much more expensive distant hire rates. Its great to get 30% back on your crew, but if youre paying 50% more in the first place then the finances simply dont work out. I would urge that a comparison study of all film incentives be conducted and updated on a regular basis by the state film office and made available to those budgeting for multiple locations. We have little to fear, and we will come out of this well.

PAGE 3

FILM 2013 A SIMPLE PLAN

EXPERIENCE MATTERS
Over the years we have built an inventory of not only crew and vendors, but of experience. It is no longer a surprise to see a movie crew in downtown Albuquerque or Santa Fe. Everyone from local businesses to law enforcement and government officials has become not just proficient but expert in dealing with everything from the permitting process to street closures and night shoots. This should be included in an overall inventory of what we offer that others cant. Such an inventory should also in some subtle way point out that we do not have the extremes of weather that states like Alaska and Louisiana have. Equipment doesnt need to be shipped in as it would in Mississippi or Oklahoma. Its easier to shoot here than in downtown Atlanta, Philadelphia, or Boston. If we eliminate shows that require large ships or oceans, its hard to think of a state that has a rebate such as ours that can double for so many other places. We have successfully shot everything from Afghanistan to Africa, New York to Nebraska. These are all part of our inventory and this is a good time for us to put that inventory together. I am happy to put our crew roster and experience against any other state. In fact, on any given day New Mexicans are crewing and keying multiple pictures nationwide. As I write this, a 480 gaffer is handling a major motion picture in Pittsburgh and there are dozens of NM members in NY, NJ, CT, and PA. Our members are becoming familiar faces to the flight crews between New Orleans and Albuquerque. Several have taken great offers and moved to CA, OR, and even Kuwait we hope they will come home should we experience a surge, as its hard to get the New Mexico sky out of your system. I believe that our soundstages and equipment packages are as good as any outside of CA or NY. Im not sure that this hasnt been forgotten, particularly by some of the large pictures who attempt to shoot in other locales just to find out its a lot more expensive and difficult -- no matter how much due diligence they believe they have done its still not comparable with real world experience on the ground. Getting the word out is a task for those of us in the industry, with the assistance of the state film office. We should embark on it immediately.

PAGE 4

FILM 2013 A SIMPLE PLAN

MONEY CHANGES EVERYTHING

The main deterrent as far as I can see to making more New Mexico-based projects both in TV and film is not a lack of stories or talent to tell them, but an inability to raise capital to make projects large enough to pay a living wage. I truly believe that after the collapse of the NM Film Finance program we need to put a financing mechanism into place to assist New Mexico film makers make good movies, and not simply continue a granting process that does not move our film makers on to the next level. There are several ways we can go about this. In private industry we are currently looking at a couple of projects where our members can participate in both the risk and the reward. We should look at the possibility of tax credits to New Mexico individuals and companies when they invest in projects that create high paying jobs, be it in film, oil and gas exploration, high-tech or green manufacturing, or other industries. A good job is a good job no matter where it comes from and it should be the duty of the state to encourage job creation wherever possible. Since New Mexico ran a $200 million surplus in the last budget year, we should look to return some of that money to New Mexico taxpayers for their investments in job-creating industries such as ours. We should also look to opportunities in the real estate market and take the model of the success of I-25 Studios as one that may work in other areas of the state. Real estate is practically going begging right now - a Solo cup factory in Belen sold for $2.25 million that was 160,000 sq ft + 40 acres. CNM purchased the old semiconductor plant in Albuquerque for pennies on the dollar. What else is out there? With the collapse of the residential market we should also be looking at attracting film makers who can no longer afford the cost of living on either coast. Places like Truth or Consequences, Silver City, or Las Vegas offer bargains that you will simply not find in any other film center. I would encourage the school training programs to look at these as marketing opportunities to bring in mentors who will work to create projects in much the same way that Mark Medoff has done in Las Cruces. An all-weather set that can be multi-purposed as any town USA or Afghanistan or a period western would be a great investment and a strong kick starter to production in the southern part of the state.

PAGE 5

FILM 2013 A SIMPLE PLAN

WE NEED TO BE SEEN
We must give regular and predictable opportunities for New Mexico film makers to display what they have and monetize their content. There are many platforms where independents can post their product these days. To my knowledge none of them are based in NM. We need one supersite where NM-made content can be either rented or purchased. This would include webisodes, shorts, full length motion pictures, music, documentaries, everything. Perhaps a site that could be administered by a third party such as Amazon or ITunes might be practical in the future, but for now I would suggest one of the schools take it as its task. Once the site is established we can talk about the fact that we will vigorously enforce copyright, etc., to increase participation. I would suggest we support monthly film festivals spread across the state. This would give film makers predictability in knowing when they could show their films and could provide support to some of the existing festivals by guaranteeing them at least some regular income (by the way this is not a new idea; Grubb Graebner has been working on this for a while). Each festival can play off others with shared publicity, shared ticketing and passes. State and local lodgers tax funding could be sought to help build a sustainable cottage industry. It would also revive the festival business in places like Taos and create a new industry in places like Silver City or Carlsbad. Festivals would be encouraged to have a theme -- perhaps a labor festival in Silver (one that I would happily support) -- and guarantee a certain number of spots for NM filmmakers. One large overall sponsor like a foundation or national company could be sought. I could see this being a project that the Gas Co of NM or PNM could get behind. Getting into your first festival is often the hardest; we can make sure there are opportunities to do so. We need to create a digital platform for a regional theatrical release model. There are many independent theaters all over the state. If we go into West Texas, Colorado, Utah and Arizona, we can put together a substantial number of theaters where a movie could secure a theatrical release and the benefits that come with it such as a lower priced union contract. We could take this one step further by having a made in NM slot at every Red Box in the state and at least move some DVDs out there to kick start sales. There is a great deal of legitimacy to a picture released in multiple platforms; this would be a way to create opportunities for those platforms.

PAGE 6

FILM 2013 A SIMPLE PLAN

WERE NOT JUST MOVIES AND TV

One of the concerns expressed to me about the current slower period is if there will be employment opportunities for people in high school and college. Frankly, if we dont deal with this situation, the answer is no, and we will lose our best and brightest a consequence the Governor hopefully has taken into account when she looks at our film incentives. I believe there are ways to ensure a pipeline of good jobs and its up to us in the industry to see that the training is specific to where the opportunities will be and to tailor our expectations accordingly. Back when the original MIST plan was presented, we talked a lot about what seemed like science fiction at the time. Much of it has now become a reality and NM is a leader in these technologies. The main drivers are the two national labs and White Sands Missile Range. I believe a new commercial opportunity will come about with the Spaceport. We have participated in some nascent technologies around medical imaging and its important that our four year schools tie into this emerging field and bring our trainees with them. If we miss this opportunity in the same way we are missing the boat in gaming, its something we will live to regret. Those of us who grew up with Bones McCoy and his tricorder on Star Trek or Dr. Beverly Crusher on the ST: The Next Generation are watching things we never believed would become a reality. Portable x-ray and MRI scanners are here and within 5 or 10 years will become standard equipment on ambulances. The ability to identify, diagnose, and treat multiple injuries at any mass tragedy site in the world should come out of NM and it should be our film and technology students who are operating these machines for our trained medical practitioners. We are many steps beyond video games in simulation here at the labs in terms of keeping our atomic arsenal safe and viable and in protecting and enhancing the capabilities of our armed forces. We have done a poor job of tying this together with our high school students, and our colleges are struggling to keep up with the changing technologies. This should be a priority if we plan not to lose our best students to other states (only 1 in 20 of them will return after graduation). What we need is a loya jirga for us to sit down with everyone involved, put our preconceived notions aside and discuss where were going in this field and react before its too late.

PAGE 7

FILM 2013 A SIMPLE PLAN

KNOWLEDGE IS POWER
In addition to my previous discussion of training, I believe that we need to make a strong statement as an industry that we support the continuation of film training in our high schools and in our two and four year colleges. As an industry we can integrate ourselves more thoroughly into the process by expanding the opportunities for these students to receive meaningful opportunities on sets. Im not a big believer in using interns, especially when they displace a paid position. I think its very unfortunate when a picture company can afford to pay someone and they choose not to simply because there is an intern available. That does not mean that we shouldnt put interns on projects but we should look to tailoring opportunities to fit both production and educational needs. Alan Trever and Roswell have done very well at providing paid internships on commercial projects, both motion picture and television. That template could work and if modifications have to be made we should be prepared to work with the schools to provide the legal and practical advice on how to do so. In the high schools I find that competitions with cash or product prizes work very well. Colorado ran a contest for videos to promote that state with cash prizes; I see no reason why we couldnt do the same. Municipalities and other governmental entities could do so on a smaller scale. This is really just a matter of sitting down and working out logistics. A well-trained crew base is a huge asset. CNMs push to establish a repository of all our collected works will be an invaluable tool to highlight that experience. If we are to continue to provide meaningful incentives to out of state hires we should not only put severe restrictions on the practice but there should be a requirement that a New Mexican is hired to shadow or train for that position. The highly successful FCAP program provides 50% of wages for that trainee plus a 25% rebate so a picture company seeking reimbursement for an out of state hire because there is no local hire available should not find it a burden to pay for that additional trainee position. Its a compromise that allows us to keep some of the existing practice and eliminates the rationale of no local availability in the long run.

PAGE 8

FILM 2013 A SIMPLE PLAN

ITS ABOUT THE ATL

If New Mexicos ever going to become a truly self sustaining film center, we really need to work more on our above the line (ATL) talents. I realize this may be controversial but I believe it may be time to start scaling back incentives for out of state actors. We included them in the original incentives because we didnt have a large enough talent pool here in the state to be able to provide even day players or featured extras. That is where the super loanouts came from, and, even though there is effectively double taxation on out of state actors, I really believe it is time to start moving in the direction of eliminating anyone from out of state from the incentives and this would be as good a place as any. We have already capped total actors payroll at $5 million. We should look to gradually restricting rebating out of state actors to encourage more home grown talent. Im open to suggestions on how. We also need to recognize and encourage more local producers by assisting with funding and more local directors and writers by tying that to funding accessibility. One big gripe I have is when Im dealing with less experienced production managers from out of state while locals fully versed in the rebate programs are sitting on the sidelines ready to hire New Mexicans. I believe that a certification program, topped by NM Tax and Rev, for instate production managers would give them a clearer boost. We should also find a way to move them to the top of the line if all other factors are equal on when the rebate should be issued, as the assumption would be that they would know more about the rules and regulations and therefore be less likely to be subject to denials and corrections. Something as simple as three pictures in New Mexico with significant budgets and no major corrections should be enough. This should be a focus for the NM Film Office.

PAGE 9

FILM 2013 A SIMPLE PLAN

STUDYING THE STUDIES

SB44 specifically calls for a study based on the econometrics of the film business in New Mexico. Frankly, I think few people know what that means, and the current discussion about another study on the effectiveness of the rebate program should be a concern for anyone who would rather we didnt waste money. I can tell you the results right now and save us all a quarter of a million dollars. If you believe a prime purpose of government is to create jobs, then film incentives are cost-effective. There is no quicker or better way to create high paying, quality careers with full benefits in a state like ours that struggles with distribution chains, infrastructure and an underfunded educational system. If you believe that government should play no role in creating private sector employment, then this is simply a waste of taxpayer dollars. Depending on where you come from, that will be the results of your study. What is interesting is the tern econometrics. What that really means is that its not simply a matter of money out and money in; its a holistic approach that looks at the effect on the entire economy, including industries that might seem unrelated. As a union guy more than a film guy, Ive always asked, Whats your plan to create this type of high paying jobs? I may like it better. In the 18 years of proposing film incentives to the legislature, Ive yet to see anything that comes even remotely close. A study needs to take into account the huge beneficial effects that film can bring, not only to the communities they shoot in, but also to such intangibles as the image of our state, hope for our kids and educational system, retention of college graduates, long term positive effect on tourism, and where we would be if we didnt fund this type of initiative. We also need to quantify factors like the money sent back to the state by the thousands of New Mexico film workers now working around the world, markedly higher graduation rates of students in film and video programs, and the related skills that trained film workers bring to other industries, amongst many other benefits. A study is a great thing; lets just make sure we study the right things.

PAGE 10

FILM 2013 A SIMPLE PLAN

DONT PANIC
Coming back to the incentives, which kick-started what was a moribund industry in the early years of this century, we need another big incentive and I believe it should be tied to infrastructure. As Lone Ranger clearly showed, we need an all weather western set in the south, and I think that if we want to continually attract large pictures we need to give them what they most want ( in addition to the incentives) and that is cheap or free infrastructure. It is not practical to assume that we can go back and ask for any enhancement that costs money from the legislature. The corollary of this is that the legislature is inclined to leave us alone (with the possible exception of a couple of outliers) if we can live within our $50 million floating with the cost of living increase and -- I would argue -- a strong exemption for television. There are numerous resources including municipal bonding and IRBs available and NM has some innovative initiatives we can draft to fit with our business. We will miss the opportunity to enhance our instate infrastructure using SB44 if the language is not strengthened and clarified. If it is, it will be our own fault if we do not take advantage of the opportunities presented. We also need to look at non incentive opportunities like a PBS license for the northern part of the state to help create long term jobs and fund native film makers. Internet and crowd source funding based around new federal regulations are about to kick in. NM should be a leader and not left behind. After all, we reinvented this business in the late 90s and early 00s; we need to do it again now. To sum up..DONT PANIC! We have a lot of things that are right, and what is wrong can be fixed. New Mexico will continue to be a film center as it has for over a hundred years.

PAGE 11

FILM 2013 A SIMPLE PLAN

FIVE THINGS YOU CAN DO TO PROMOTE FILM IN YOUR COMMUNITY

1. Network socially. The new generation of film makers tends to avoid the traditional Internet and communicates instead on social networks such as Facebook. If you community doesnt have its own frequently-updated site, youre not in the game. Build a Facebook page, post lots of pictures, and have lots of people add new content. Beg for friends. 2. Be involved in the film community. You probably have someone in your area working in film or television and just dont know it. Look at resources such as IMBD or the NM Film Office listings and reach out to film workers and film makers to have them become film activists or advocates for your community. Your local high school AV teacher can be an invaluable resource. In any business, networking is important. 3. Create productions. Do you have an amazing video of your community? You should. It sells your community not only to film companies, but to other businesses that are looking to relocate or open. Years ago we did a promotional video on Hobbs and Eunice with a focus toward Dutch nuclear recycling engineers; it became a great promotional piece for the whole community. 4. Host a film festival. What is unique and special about your community? Chances are, films have been made on that subject. A film festival is a relatively inexpensive way to highlight what you have on a national or even international level. Carlsbad could host a caving festival, Cimarron, a ghost or paranormal festival. My personal favorite would be for Silver City to host a labor festival, and of course Lincoln could host one on Billy the Kid. Its a great way to fill a town for a week or weekend, and once established it promotes itself. 5. Create a unique shooting experience. Many locales have considered building a film studio. Frankly, we have state or the art studios in Albuquerque and Santa Fe. What we really need are standing sets. Look at downtown Carrizozo in the Book of Eli; its a shame it was dismantled after shooting. We really need an all-weather western set in southern New Mexico! The all-American Midwestern city that could be anywhere could literally be built anywhere. Also, if you have the space, look to house props, flats, and costumes. Again, these resources can be promoted on social networks such as Facebook. Good luck. The New Mexico Film Office and IATSE Local 480 are standing by to assist you.

PAGE 12

FILM 2013 A SIMPLE PLAN