LANSING – The Michigan Film Office is garnering a greater deal of interest from big names in Hollywood, Film Office Director Margaret O’Riley said in a recent interview, and the plan to diversify incentive investments could yield an even greater return by keeping the state’s graduates in a new, exciting and potentially growing industry.

In business since 1979, the Michigan Film Office began as a few people providing assistance for commercials and training videos shot in the state. With support from former Governor John Engler and especially former Governor Jennifer Granholm, that blossomed into more traditional movie productions. Not only has that maintained currently, but now it is also looking to expand its reach in the digital media and video game development industries as well, O’Riley said in a recent interview with Gongwer News Service.

“That is definitely something we’re trying to increase: our profile with that industry,” she said. “Let them know that if they’re working on specific games and/or digital media type productions, they can apply, and we would very much like to have them come here. Those are typically longer-term type projects, longer-term jobs.”

She said students graduating from places like the University of Michigan, Michigan State University, Ferris State University, Western Michigan University, Henry Ford Community College and the College for Creative Studies can find jobs in the digital media, video game development-type industry whether they study that directly or study something such as computer science.

“They’re learning how to write programs, how to do this, so that’s very transferable to writing a video game and it’s pretty cool,” O’Riley said. “That is definitely an area where we’re trying to attract, as well as post-production investment.”

The Film Office currently has a $50 million budget to work with and is looking at the same amount of funding in the upcoming 2013-14 fiscal year pending final approval by the Senate on Tuesday. The system is much different than what had been seen in the Granholm administration in that now the state has a cash incentive program rather than handing out tax credits. The framework for that was approved in late December 2011 with a bill by Senate Majority Leader Randy Richardville (R-Monroe), who again this year advocated to up the ante from a $25 million budget suggested by Governor Rick Snyder to its current $50 million.

Even last week, Richardville continued to defend the increased funding for the program.

“I think that’s the right thing to do,” he told reporters after session. “The data still is not out there for the revised percentages that we’ve put together about 18 months ago, but I think that once the pencil is put to paper, you’re going to see the film industry is bringing in a lot better return on investment than the one that was under the Granholm administration.”

Richardville said he was not criticizing the Granholm system though, as it drew much attention from the industry to the state, but keeping funding up would be “taking it to the next level where we’re competitive but we’re not giving the farm away,” he said.

And O’Riley said that change of system has worked out well.

“I think Michigan has a real advantage in the eyes of production companies by the fact that we’ve switched to a cash rebate program, for lack of a better term,” she said. “Basically after the production is done and they turn in their certificate of completion and we go through the proper audit, we can distribute the money immediately and it comes out of the program versus the tax credit, which could carry on and it might turn into some sort of selling off of tax credits.”

But that 2011 legislation also lays out the criteria by which a project can receive an incentive, which includes such things as spending a minimum of $100,000 in-state as well as using Michigan workers and Michigan vendors. And even though Michigan used to be big on commercials, film incentive money for such purposes is now prohibited, as are incentives for a sporting event and a current news event or program. The Film Office is also required to spend at least 5 percent of its budget on post-production expenditures every year.

Last year, the state had 32 projects apply and the Michigan Film Office awarded 13 incentives. To date this year, it has had 31 projects apply with 19 awarded incentives. In calendar year 2011 – when the Michigan Film Office had not yet switched to fiscal year – it had 85 projects apply and 24 approved, though it was still operating as a tax credit program with direction to work within a $25 million budget.

O’Riley said that while she cannot speak for Film Office operations before her tenure, she could say that in her time so far she has not seen a project turned down for lack of money. Rather, it’s just the nature of the industry itself.

“Often with productions, they’re very fluid,” she said, adding that film projects generally start with an idea, express their interest in the incentive but then are not awarded money because they never end up signing a contract. “The studio didn’t pick it up or they didn’t get the financing in time or I don’t even know what happens sometimes.”

O’Riley said she wouldn’t describe a $50 million as “limited” when considering how Michigan stacks up against other states with similar film incentive programs.

“We’ve been able to pretty much manage and work with the productions and move forward,” she said.

She said Michigan often competes with states like North Carolina, Georgia and Louisiana for productions, with Louisiana being especially known as a “hotbed” for movie productions. But Louisiana just cut back on its program after what she said called a “very hot debate,” and North Carolina’s program is also being debated.

“So the fact that this program is controversial is not intimidating to me as the film commissioner. I think all incentive programs are controversial,” she said. “And I think that that debate is going to continue across the country in state legislatures in trying to figure out what’s the right type of balance for attracting that type of investment to the state, keeping those investments focused at Michigan workers, Michigan vendors, et cetera, while still keeping somewhat a high-profile nature to attract the successful projects.”

And when asked if there was anything Michigan could improve on to better position itself for landing productions, O’Riley said there was not and that she believes Michigan is doing a great job. She went on to say that an example of that is Michigan, alongside competitors Louisiana, Georgia and North Carolina, has been asked to be on a locations tradeshow conference panel called “The Best of the Best” in Los Angeles in the coming months.

“Our goal here is to try to fund projects that are of various levels. I think that it’s like any business: You don’t want to put all your eggs in one basket. You want to have a mix of projects, small, medium and large,” she said. “The large ones bring the star power typically and keep you on the radar screen of some of the financers and executive producers in the industry. But then the medium-sized and the smaller projects are the ones that really use a lot of Michigan people and Michigan products and services and so forth. I think the more we can continue with that strategy, it’s good for the industry.”

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