Tax credit supporting R.I. film industry

LEADING MAN: “Almost Mercy” director Tom DeNucci, above wearing sunglasses, gives instructions to actors on set. / COURTESY R.I. FILM & TELEVISION OFFICE
LEADING MAN: “Almost Mercy” director Tom DeNucci, above wearing sunglasses, gives instructions to actors on set. / COURTESY R.I. FILM & TELEVISION OFFICE

The filming of Woody Allen’s latest movie in Rhode Island, bringing actors Joaquin Phoenix and Emma Stone in the starring roles, has brought both a summer movie buzz and an entourage of cast and crew who will be spending dollars in the Ocean State.
“I’m waiting for the final list, but usually a major motion picture has 200-300 full-time crew members,” said Steven Feinberg, executive director of the R.I. Film and Television Office. “In addition to the cost of the production, they’re spending money on other vendors and at lots of small businesses in the locations where they’re filming.”
The economic boost from movie production in the state has been one avenue of promise in a still-struggling economy, despite the uneven and unpredictable nature of the film industry, according to Edward Mazze, distinguished professor of business administration at the University of Rhode Island. Mazze onducted a comprehensive study of the state’s Motion Picture Production Tax Credit.
The study examined the economic impact of the tax credit based on productions in the state from 2005 through 2009 and found that every dollar invested in the tax credit returned $8 in economic activity. Although that study is four years old, Mazze said he’s convinced it still holds true that the 25 percent tax credit ends up being a financial multiplier for the state’s economy.
“Woody Allen wouldn’t be here without the tax credit,” said Mazze. “The actual tax credit is a marketable instrument. I think people who have been opposed to the tax credit may want to see a return on the money the next day. Those are people who will give you a dollar on Monday and want to get $1.20 back on Tuesday. They don’t understand that the tax credit supports the development and maintenance of an industry.”
Mazze points out that many schools in the state, including Rhode Island School of Design, Rhode Island College and New England Institute of Technology, have programs that nurture acting and production talent.
“I think the tax credit is an excellent thing for the economy and it takes advantage of the assets the state already has,” said Mazze. “There are a lot of creative people in Rhode Island and the tax credit allows these individuals to benefit in terms of having jobs, because it brings productions to the state.”
The way the Rhode Island Motion Picture Production Tax Credit works is the R.I. Film and Television Office determines which expenses qualify, principal filming is done in the state and a minimum of $100,000 is spent on the production, said Michael Canole, chief of examination for the R.I. Division of Taxation. “The R.I. Film and Television Office oversees the program and reviews each proposal,” said Canole. “That offices basically says, ’Does this film pass muster?’ If it does, the film office grants the authority to proceed.
“When the filming is completed, the production company files a report detailing the costs,” said Canole. “The tax division reviews it. We scrutinize the report and, based on their qualified costs, they get a 25 percent tax credit.”
That tax credit is transferrable and often sold, he said.
“The film company may not yet have any income to apply that tax credit to, because the film hasn’t been shown in theaters yet,” said Canole. “To make that tax credit valuable, it is saleable to individuals or corporations. So, if the film-production company sells it for less than face value, they get the cash and the person who buys it gets the tax credit.”
Sometimes the tax credit is broken down into smaller denominations to make it easier to sell.
For example, if a film company spends $1 million in approved production costs, it gets a tax credit for $250,000 that can be sold to purchasers who, in turn, can use it to reduce their tax liability.
“It’s because of the motion-picture tax credit I’ve been able to stay in Rhode Island,” said 29-year-old Cranston filmmaker Tom DeNucci, who recently wrapped up production of his feature film, “Almost Mercy,” filmed in Woonsocket, Cranston and East Greenwich.
“Screen Media Films has acquired the worldwide rights, with Universal releasing the movie to more than 100 million homes through their Video On Demand platform,” he said.
DeNucci works with East Greenwich-based Verdi Productions, which handles movies that have a budget of more than $1 million, as well as with its partner firm, Woodhaven Films, which handles films with less than a $1 million budget.
A graduate of NEIT with a bachelor’s degree in digital-recording arts, DeNucci started working in film production directly out of school.
“Without these tax credits, we wouldn’t be able to facilitate productions the way we can now,” added DeNucci. “It allows you to stretch your budget.
“It does trickle down and filter back into Rhode Island from the productions, from crew members buying dinner to running to a mom-and-pop hardware store to grab something we need,” he said. Rhode Island has a $15 million cap on the amount of tax credits it can issue in one year, which is the total for film and television, as well as musical and theatrical productions, said Canole.
The $15 million cap took effect for calendar years beginning Jan. 1, 2008, said R.I. Tax Administrator David M. Sullivan.
The tax-credit program’s $15 million annual calendar-year cap is equally available to motion picture productions and musical and theatrical productions, with no specific amount set aside for either type of production, said Sullivan.
“The $15 million cap has impacted our ability to attract productions,” said Feinberg. “It limits the amount of productions per calendar year. Some other states don’t have a cap.”
Rhode Island awarded $70,722 in tax credits for one motion-picture production in 2013, according to the R.I. Division of Taxation. In 2012, the state gave $11.4 million in tax credits for four productions.
In the previous years, the tax credits were: in 2011, $2.4 million for five productions; in 2010, $8.1 million for five productions; in 2009, $10.1 million for eight productions; and in 2008, $12.8 million for four productions.
It’s unclear how much of a role the tax credits played in bringing Allen to Rhode Island, though his representatives knew they were available.
“Once we were able to find the locations that Woody liked, then I just asked if they were aware of our tax credits and they were,” said Feinberg.
Anne MulHall, owner of Rhode Island-based LDI Casting, thinks the tax credit has benefited the state financially.
“I get hired by the production company to do the extras casting,” said Mulhall, who said the big production of companies in New York or Los Angeles frequently call teams they know or have been referred to, and there’s a lot competition from Boston for New England productions.
“Boston has three or four casting companies,” said Mulhall. “On the Woody Allen movie, the big names are already decided, Boston is casting the smaller roles and I’m casting the extras.
“I’m waiting to see the extras breakdown for how many background actors they want,” she said of the as-yet-untitled movie, for which filming began earlier this month and is scheduled to run through the end of August at various locations.
“Whatever brought Woody Allen here, whether it’s the tax credit or the mansions or something else, that’s good,” said Mulhall. “When people hear that Woody Allen’s new movie is filming in Rhode Island, that helps all of us.” •

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