The Breakdown

Explaining Southern California's economy

Calif. opens bidding for $100M in film and TV tax credits

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The California Film Commission began accepting project applications Monday morning for $100 million in tax credits from California's Film and Television Tax Credit program.

If the program's recent history is any indication, by the end of the day, there will be more applications turned in than the money can cover.

“We had 380 applications on the first day last year, and the $100 million only covered 34 of them,” says commission director Amy Lemisch.  "Each year, we get more than the previous year." 

So how does the film commission handle the overload? With a lottery.

Staff assigns a number to each application received at the commission's Hollywood Boulevard office by 3 p.m.  At 3:30, the drawing begins — overseen by the state fire marshal's office.  The numbers are drawn at random to see which projects will receive the tax credit and which are on a waiting list.

"The lottery is California's unique solution to a unique problem — demand for our tax credits far exceeds supply," the Film Commission wrote in its recent newsletter. 

This year's lottery will happen just days after a bill to expand the tax credit program passed the California State Assembly. Support was unanimous, but so far legislators have avoided declaring exactly how much they want the tax credit pot to grow.

New York, with a film tax incentive fund of more than $400 million, is the Golden State's most aggressive competitor.  As the bill moves through the California Senate this summer, legislators must determine whether to try to match or exceed New York's offering, or simply raise California's offering to something more competitive than $100 million. 

What legislators are ready to do is make more projects eligible for the tax incentives, which cover about 20 percent of production costs if shot in California.  The bill would allow big budget feature films to apply for the  incentives, as well as TV pilots and new one-hour TV series, which include original programming on streaming services like Netflix. 

Last year's winners of California's tax credit lottery included a feature film version of the HBO series "Entourage," Lionsgate's "The Wash" and "Pretty Little Liars."  Past recipients include the Oscar-winning "Argo" and the television series "Body of Proof."

“Producers constantly tell us that California is their preferred choice for shooting," Lemisch told KPCC.

On Monday afternoon, the commission will announce how many applications it received. On Tuesday, it will announce the number of projects that are under review for the tax incentive, Lemisch said.

Unlike in years past, as Variety reports, the commission will wait until early July to announce the names of the winning projects.

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