Roll (tax) credits: A second look at Ohio's film tax credits

Back in May of 2011, hiVelocity sister publication Fresh Water Cleveland ran a feature about Ohio's Film Production Tax Credit. At the time, the tax credit was just beginning to attract filmmakers to the Buckeye State -- and Cleveland in particular. Big budget productions like "The Avengers" and "Alex Cross" generated considerable attention as they shot downtown, while smaller films like "Take Shelter" and "Fun Size" also utilized locations in and around Greater Cleveland.
 
Most of these films were released over the past year to varying degrees of success. You probably heard that "The Avengers" did well at the box office, while Tyler Perry's turn as a cunning detective in "Alex Cross" left most film-goers wishing he'd stuck to drag. In the end, though, the success of the film is far less important to Cleveland and Ohio than whether or not these productions benefit the local economy.
 
So, do they?

According to Ivan Schwarz, Executive Director of the Greater Cleveland Film Commission, the answer is yes.
 
"We had 27 films in the first two years of the incentive program," Schwarz states. "We did a study with Cleveland State University, and it showed that there was $119 million spent in the state of Ohio that never would have been spent here otherwise. $87 million was spent in Northeast Ohio, creating 1,100 full-time equivalent jobs, with 900 of those in Northeast Ohio."
 
Most of the jobs went to producers and directors, audio and video equipment techs, camera operators, film and video editors, and a large number of low-paid extras. As for how many of these jobs went to residents of Northeast Ohio, the study doesn't specifically state. But it does show that only 39 percent of all jobs went to out-of-state residents.
 
As for return on investment, Schwarz says the numbers hold up.
 
"For every dollar that was spent from the incentive, the state got back $1.20," he explains. "So in terms of jobs and economic development and return on investment, I think we can call the program a success."
 
However the Tax Foundation, a non-partisan tax research group based in Washington, D.C., looks at the same study and reaches a less rosy conclusion. In an article on their website, they state that the tax credits given for film production amounted to $28.3 million. All the economic activity the study attributes to these incentives only brought in $5.9 million in tax revenue, or $0.21 per tax credit dollar.
 
It's a complicated issue, and both points of view can reasonably claim to have the facts on their side. But what it really comes down to is whether or not you believe these productions would have filmed in Cleveland without the tax credit. Given the current climate, in which 37 other states offer similar tax credits, that seems unlikely. Ohio may take in only $0.21 per film tax credit dollar, but it's better than getting 100 percent of nothing.
 
However you slice it, the Cleveland State study shows that film production in Ohio has, in terms of net revenue, been a positive for the state and Cleveland in particular. In addition to direct gains from the purchase of goods and services, hotels rooms and food, and various other expenditures, there are less tangible benefits to having the film industry come to town. Civic pride, for one. The Browns might not make it to the Super Bowl this year (next year for sure, right?), but we can at least lay claim to being the city where the third-highest grossing film of all time ("The Avengers") was shot.
 
Of course, in "The Avengers," Cleveland was posing as other cities. But in "Fun Size," a light but loveable tween comedy released last year, the city got to play itself. Initially, that wasn't the case, notes Schwarz.
 
"They had such a great experience here, they decided afterwards to set it in Cleveland," he explains. "Originally, it was just some city somewhere in the United States. Since they were having such a great experience, and there was so much of Cleveland in the film, they saw no problem with just setting the film in Cleveland."
 
The end result arguably is the most favorable onscreen portrayal of Cleveland since… ever. It not only makes Cleveland look good to out-of-towners; it also helps remind some of us residents that Cleveland really can be a fun place.
 
Even if the Tax Foundation doesn't see the benefit of giving tax credits to the film industry, our elected officials do. Originally, the tax credit was capped at $20 million per biennium. Evidently, they were happy enough with the way the tax credit has performed so far to double that amount.
 
"I felt confident that we had the numbers to support what we were doing," says Schwarz. "It's doing what it's supposed to do. I thought we had a compelling argument, but until you go down there and talk to the legislators and the Governor and try and make your case, you don't take it for granted."
 
While Schwarz can't divulge productions slated to come to town until announced by the studios, he can mention one: "Captain America: The Winter Soldier," which brings Marvel Studios and "The Avengers" star Chris Evans back to town. "This is a different movie with a different set of circumstances and challenges,” he notes. “We were in the running with many other states, and fortunately we proved to be the right place for this film. Again, we never take anything for granted; we always have to be on our A-game."
 
As an added bonus, the film will bring hometown boys Joe and Anthony Russo ("Welcome to Collinwood," Arrested Development, Community) back to town. “It's fantastic," adds Schwarz. "We've been working with [the Russos] for years, and it's exciting that they're going to be able to come home. We never thought it was going to be "Captain America" that brought them home, but we're certainly happy that they're home and that this is the vehicle that brought them here.”
 
Schwarz credits the level of customer service that Cleveland provides to filmmakers as a key reason behind Marvel's and other studios' decision to come to town. But he also envisions bigger and better things for the future of film production in Ohio.
 
“Now we're focusing on building the infrastructure -- building and creating a media technology center, becoming a global hub for film," he says. "Whether it's gaming, animation, or any other technology associated with the film industry; this is about looking to the future.”