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Hooray for California Filming

With so much bad news out there, it is always nice when something good happens. I’d like to highlight some very good news that occurred recently, when on June 27th Governor Brown signed Senate Bill 871 – the California Film and Television Job Retention and Promotion Act. This bill extends for another five years the film/television tax credits program, which was set to expire in July 2020. With the new program, the tax credits are extended until July 2025.

Extending the program this year was important to maintain the momentum of the program and the health of our entertainment industry. To compete for television series that have multi-year runs, the production companies that make the decision on where to shoot need to know that the film tax credits will continue beyond 2020.

I remember in the early 1990s sitting in the office of an executive at Stephen Cannell Productions, who related to me how movies-of-the week, which generally are low margin productions, were beginning to shoot in Vancouver, Canada, to take advantage of their film tax credits. This was alarming news to me. For years thereafter, every time our Chamber would travel to Sacramento, we would tell the legislators about how Canada’s film tax credits might endanger California’s hold on the entertainment industry. No one took us seriously. Meanwhile other states jumped on the bandwagon offering incentives of their own. Eventually, more than 40 states offered programs to woo California productions. Movies-of-the week were only the first sector enticed with tax credits. They were followed by feature-length motion pictures, TV pilots, and then television dramas and finally television comedies. Eventually, things got so bad that the legislature took notice.

In 2009, the State legislature approved the first incentives program, which the California Film Commission (CFC) refers to as 1.0. At that time, $100-million a year in film tax credits was approved to see if California could compete effectively against other states. The program proved to be wildly successful. The CFC reports that 1.0 provided in aggregate $667-million in tax credits. Projects that were funded are estimated to have spent $5.3-billion directly, including an estimated $1.9-billion in qualified “below the line wages” to the thousands of middle-income workers who make the movies and shows that we love to watch.

In 2015, the legislature expanded the program (version 2.0), allocating $330-million a year to attracting and retaining the industry. In the first two years of 2.0, California gained 38 feature film projects, 50 TV projects (composed of 8 pilots, two movies-of-the-week, 27 TV series, one mini-series, and 12 relocating TV series from other states). California motion picture employment increased 12.38-percent in one year – from 162,300 to 182,400 between 2015 and 2016.

While the new jobs are wonderful for the economy, what to me is even more gratifying is that thousands of L.A. families have been reunited. Many in the industry had been forced to chase their jobs to other states when the work dried up in California, spending months at a time away from home.

Aside from the jobs, there are numerous other benefits. FilmL.A. reported last year at our State of the Entertainment Industry Conference that L.A. stages were operating at 96-percent of capacity, a big change from a few years before. And now new stages are being built by people like our own Chamber Board Member Alton Butler to fill the demand.

The impact of the film tax credits can be seen on our streets. Here is one example – Quentin Tarantino’s latest movie, Once Upon a Time in Hollywood, is actually being shot here in Hollywood this summer. The CFC reports it will have 103 filming days in the State, employing 255 crew members and a cast of 82, plus 4,892 extras and stand-ins. The State has reserved tax credits of $18.02-million for the production, which is expected to spend a total of $89.5-million in California.

As if this in and of itself is not good enough news, the State also gets a return on its investment. The CFC reports that an average $70-million feature film generates $10.6-million in State sales and income taxes. So, the State makes back a large portion of what it is giving out in incentives.

When it comes to movies and television shows, I must admit that I am one of those guys who likes happy endings – and that is definitely the case with this new legislation! Hooray for Hollywood and the California legislature!


Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 26 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.

Job Creation Needs to be a Top Priority

There has been a lot of information in the news lately about jobs. Let me share some statistics with you.

Last month, the Los Angeles Economic Development Corp. (LAEDC) projected that job growth in this county would result in 346,000 new jobs between 2015 and 2020. That is in addition to the 469,200 jobs created since the rebound began in 2010. L.A. County led the nation with the largest number of jobs created during that period, according to the Washington, D.C.-based Economic Innovation Group.

That sounds pretty good until you learn that most of the new jobs we are creating pay below the median wage (which was $32,537 in 2014). The LAEDC report showed that the largest growth area would be in office administrators and food servers, which will add 93,000 jobs. By comparison, the county will gain only about 19,000 production and engineering jobs. The LAEDC said that Los Angeles may face a “brain drain” if it can’t figure out how to create more lucrative and advanced jobs.

I’m sure that you have read that L.A. has the largest gap in the nation between wages earned and the cost of housing. This is simply unsustainable. If we are to have a healthy economy, we must provide jobs that can sustain singles and families.

Joel Kotkin reported in an article entitled “L.A.: City of Losers?” that although our industrial job count of 363,900 is still the largest in the nation, it is down sharply from 900,000 jobs just a decade ago. He said that although the L.A. region is the number one producer of engineers in the nation, as many as 70 percent are leaving town to find work.

There are a lot of reasons for the decline in industrial jobs. One sector particularly hard hit has been Aerospace. In 1990, there were 130,100 Aerospace workers in this county. By 2010, employment in that sector had plummeted to 39,100 in the aftermath of the Cold War. And, in a sign of the times, some firms picked up and moved to Washington, D.C. to be closer to their funding sources. These were a few of the factors that resulted in this precipitous drop.

Of course there are other reasons as well. Some manufacturing moved overseas. Environmental regulations, taxes and the high cost of housing have made it increasingly difficult for some manufacturing concerns to operate here. We are not viewed as business friendly as many other cities and states. Frankly, there are valid reasons for those views.

Despite the bad news, there are also some positive signs for us on the jobs front. One of our most important employment sectors, entertainment, was hemorrhaging jobs until the State passed AB1839 two years ago which raised the incentives to bring filming back to California. Reports that I am hearing are that studios and stages in Hollywood are back operating at full capacity – something not seen in many years. Local residents who were having to go to places like Georgia, New York and Louisiana have been able to return home for work. The filming incentives have worked marvelously and will translate into thousands of middle-income jobs.

And there are new creative industries where L.A. is excelling. Mayor Garcetti, when he spoke to the Chamber last month, noted that L.A. is number one in new tech and green jobs. We need to find more niches where L.A. can produce jobs that will enable our residents to have an acceptable quality of life.

Earlier this month, it was announced that a Los Angeles-based coalition, the Smart Manufacturing Leadership Coalition (SMLC) had made the winning bid for the Smart Manufacturing Innovation Institute, from the U.S. Dept. of Energy. The institute will pool more than $140-million in public-private investment from universities and manufacturers to develop smart sensors for use in advanced manufacturing. We need more wins like this.

There is nothing that will solve the entrenched problems of poverty and homelessness more than the creation of good-paying jobs. L.A.’s natural advantages, including our unparalleled weather, respected research universities and think tanks, and some of the most creative people on the planet can help attract business. However, there needs to be a concerted effort by local governments to make the creation of median-wage jobs a top priority, rather than an after-thought. The days are long gone when we could depend on the weather alone to bring good jobs here.

That means more than just giving lip service. It means identifying areas for potential growth, listening to business leaders and then following through on their suggestions of how to attract their industries, investing to create an infrastructure to accommodate those businesses, and changing perceptions that we are not business friendly.

It is a tall order in a county with 88 different cities, but wouldn’t it be amazing if all 88 cities were working together to attract these jobs? If they did, we’d have a lot more good news stories to write.

Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 24 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood