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Why the lucrative film industry largely left Arizona in the dust

Once upon a time, you could wander Old Tucson, narrow your eyes, and get a sense of film history. Built in 1939 for the picture Arizona, starring Jean Arthur and William Holden, the faux-frontier town became an iconic Western backdrop, putting this stretch of desert forever on the celluloid map.

Locals made loads of money from the film set and a steady stream of production companies. Through the mid-1990s, in fact, movie and TV crews were regular fixtures throughout Arizona, particularly in Tucson. They noshed at our restaurants, holed up in our hotels, and prompted a steady parade of celebrity sightings. Those productions also put hometown actors and carpenters to work—for a lot more money than they'd make doing anything else in this minimum-wage town.

Then others got hip to Hollywood's gravy train. Canada was first to draw the trade away. Soon, Louisiana and neighboring New Mexico were also in the groove, offering generous tax incentives to attract major productions. The ultimate insult came in 1995, when an inferno trashed most of Old Tucson.

Still, there was hope. Beginning in 2006, Arizona offered a carrot of its own, allocating $40 million in annual tax credits for film production. When the program expired last year, that yearly pool had grown to $80 million.

In recent legislative sessions, however, right-wing lawmakers have ensured that the program won't come back anytime soon. And so Arizona no longer has much of a film industry, nor tax incentives to rebuild one. As a result, millions of dollars that came into this state and kept plenty of Arizonans employed are going elsewhere.

That bedevils Eric Schumacher. He's among a batch of young filmmakers who want Arizona to thrive, not only as a magnet for outside film companies, but also as an incubator for our homegrown talent. From his post as board president of the Independent Film Association of Southern Arizona, and as a managing member of the Web-series production company RobEric MEDIA, he sees opportunity wasted.

"What if we were to create really great tax-incentive program, similar to what they do for sports stadiums, and see if we can draw some filmmakers here?" Schumacher asks. "It has worked very well in other states."

In 2002, for instance, Louisiana instituted a tax-credit program for film production. That same year, then-New Mexico Republican Gov. Gary Johnson signed into law a 15 percent tax credit for film production; it was later expanded to 25 percent by his successor, former Democratic Gov. Bill Richardson.

Since then, Louisiana has promulgated an average of nearly 100 productions and 6,000 jobs annually; last year alone, roughly $675 million was spent there on film production. And in 2010, $204 million was spent filming in New Mexico, with more than 180,000 "worker days" and an overall economic impact of $612 million.

In Tucson, meanwhile, Shelli Hall counted the number of productions that didn't come here last year, mostly because they could get a better deal elsewhere. Hall is director of the Tucson Film Office, at the Metropolitan Tucson Convention and Visitors Bureau. She says the New Mexico and Louisiana tax incentives "have been very successful in attracting the major production that is going on in the U.S., especially the studio feature films."

A few minor successes reveal the possibilities for Tucson. For instance, she says that filming here for the movie Goats recently contributed just more than $1 million to the Tucson economy. That included 992 hotel-room nights and around 50 local crew hires. Direct spending was about $700,000, and the production company got back 30 percent of that in tax credits.

"It's the hotels; it's the rental cars; it's the jobs for people," Hall says. "The Legislature complains that they're temporary jobs. But in New Mexico, where half of (Tucson's) crew is working right now on (TV shows) Breaking Bad and In Plain Sight and all the movies, there's constant production going on."

Hall is among those pushing to revive Arizona's incentive program. "This year, we wrote an incentive where television series were favored," she says. "There was an incentive for using Arizona sound stages. ... We've learned a lot over the years, and it's a good bill. It passed the Senate and got killed in the House."

The measure was introduced by State Sen. John Nelson, a Republican from Glendale. And it was killed by Rep. Jack Harper, a fellow Republican from Surprise who chaired the powerful House Ways and Means Committee.

Neither lawmaker returned phone calls seeking comment. But in a statement e-mailed to the Tucson Weekly, Harper castigated tax-credit programs as "schemes," and said he wanted to quash any potential arm-twisting by the film-industry. "When one business stands to gain $35 million to $50 million in a single piece of legislation," read Harper's statement, "felony quid-pro-quos are bound to materialize."

But to Ken Chapa, vice president for business attraction at the Arizona Commerce Authority, the true quid pro quo involves the numbers contributed by the film industry to Arizona's economy in recent years. That's despite an incentive system that he believes was hobbled by funding caps, requirements that production crews are half made up of state residents, and a cumbersome tax-credit system.

Chapa's analysis shows that, between 2006 and 2011, film productions spent nearly $75 million in Arizona, and received about $14.5 million in tax credits.

He says the measure blocked by Rep. Harper would have eased hiring restrictions and simplified the tax incentives. He expects to try again in the next legislative session. "I think a lot of it is going to be about education—about what it is we're trying to do. We're not just handing out tax credits to anybody who comes in. It's about jobs; it's a lot of money that's dropped locally.

"There's also a cultural aspect to it," Chapa says. "When you start to nurture a film industry in your community, it does something to the types of people who move into those areas."

That grand strategy ultimately comes down to small companies with big visions, such as Eric Schumacher's RobEric Media. "If we want to build a sustainable film industry," Schumacher says, "one that truly adds to this economy long-term, we need to build local film entrepreneurship."

That means help from government and the private sector. "The way I see it," he says, "if we can stimulate film investment, and help even just four or five really well-run film businesses to really get their ducks in a row ... we'll have a film industry here."

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