PROBLEMS WITH FLORIDA’S FILM INDUSTRY TAX INCENTIVE PROGRAM

PART I: SOME OF THE PROBLEMS WITH FLORIDA’S FILM INDUSTRY TAX INCENTIVE PROGRAM

By

Al Crespo

“Please note: Florida has a very broad public records law. Most written communications to or from state officials regarding state business are public records available to the public and media upon request. Your e-mail communications may therefore be subject to public disclosure.”

The above paragraph is a standard inclusion in all official emails sent from the Florida Governor’s Office of Film and Entertainment. There is no small irony that an office entrusted with serving the most communicative of industries should provide a warning against open communication.

In a state that prides itself on having the most open and comprehensive public records law, for a state agency, especially a state agency responsible for providing service to the movie business to consciously intimidate its potential clients with this warning about communicating freely speaks volumes about the continuing problems that exists in this state when it comes to openness and accountability in the management of the services this office provides.

Take for example the Tax Incentive Program which was created in 2003, the Florida legislature through the enactment of Florida Statute 288.1254, and which was created for the purpose of encouraging “ the use of this state as a site for filming, and for providing production services for, motion pictures, made-for-television movies, commercials, music videos, industrial and educational films, and television programs by the entertainment industry”

In 2004, the Florida legislature funded the program by appropriating $2.5 million. In 2005, the Florida Legislature increased the funding for the program to $10 million. This year the legislature upped the ante to $20 million. Here is a partial explanation of how some of that money in 2004 and 2005 was spent and the problems uncovered so far.

HOW YOUR TAX DOLLARS WERE GIVEN AWAY

1. As part of the 2004 appropriation, the Governor’s Office of Film and Entertainment awarded $318.948.00, to the Latin Billboard Music Awards. This amount was $168,948.00 more than the 2004 version of FS288.1254 allowed. There is some reason to believe that this money was awarded as a way to avoid the money being returned to the state’s general revenue fund. This was a laudable effort, however, all records, and all legal options which could have allowed this award to proceed within some legal justification were either ignored or not attempted, thereby making the entire $318,948.00 award an illegal giveaway of Florida taxpayer money.

In 2005, the Governor’s Office, aware of this problem introduced language incorporated in the 2005 version of the statute identifying “TV Special” as a specific category, thereby raising a question as to whether the entire 2004 award to the Latin Billboard Music Awards was illegal since the category that they claim to have made the award under was “a made-for-television movie or television series pilot with a running time of 90 minutes or more,” neither of which is a category that the awards show qualified for.

2. There is abundant circumstantial evidence – including several revealing conversations with individuals involved in the process, or witness to the process - to support the claim that the French producers of the film Transporter 2 moved the location for their movie from Paris to Miami on the assurance that they would get a tax incentive from the Governor’s Office of Film and Entertainment as part of the 2004/2005 incentive program, before the money for such tax incentives was finally approved by the Florida Legislature, or before the application process was opened for submissions. They got $1,515,745.00 of the $2,500.000.00 available.

3. In 2005/2006, the Governor’s Office of Film and Entertainment awarded $1,503,271.00 as a tax incentive to the producers of the movie HOOT, which was based on a children’s book written by Miami Herald columnist Carl Hiaasen.

The book HOOT was also the recipient of the Governor’s annual statewide book promotion through his literacy program, “Read Together, Florida.”

The tax incentive was granted in late June of 2005, approximately 1 month after the competition of the statewide promotion for the book HOOT through the Read Together, Florida literacy program, which involved an essay contest for middle school students, and promised:

“Win a role in the movie, Hoot, along with scholarships,
your essay published in a prestigious journal and a visit
to Tallahassee to meet with Governor Bush! First place
winner will also get a change to take his/her parent and
teacher to visit the movie set in July.”

HOOT, and The Chronicles Of Narnia, another book that had received similar statewide promotion by the Governor’s literacy program only several months before, were both books that had been purchased by Walden Media as movie properties prior to their being selected by the Governor’s literacy program. Walden Media is owned by Colorado billionaire, and major Republican campaign contributor Philip Anschutz.

Given the number of excellent children’s books that are published every year, what are the odds that 2 books selected for statewide promotion by the Governor’s literacy program in a period of only 4 months, both turned out being movie properties owned by a single company whose owner is a major Republican campaign contributor?

And what are the odds that one of those films would also receive $1,503,271.00, in Florida taxpayer money as an incentive to film in Florida, when all of the principals have conceded that they could not have filmed the movie anywhere else?

Add to the mix a prominent Tallahassee lobbyist who bragged about helping the producers get the tax incentive, when the process was supposedly influence neutral, and serious questions need to be asked about whether the Governor’s literacy program and state tax incentive were used for the benefit of a ideologically sympathic major Republican supporter.

A QUESTION OF MANAGEMENT AND ACCOUNTABILITY

1. Florida Statute 288.1254 (2004) required an annual report to be prepared by the Governor’s Office of Film and Entertainment accounting for the expenditure of tax incentive funds.

“The Office of Film and Entertainment shall provide an
annual report, due January 1, to the Governor, the President of the Senate, and the Speaker of the House of Representatives outlining the return on investment to the state on funds expended pursuant to this section.”

On March 27, 2006, this writer made a public records request for a copy of that report. On April 10, 2006, this writer followed up with another public records request for this report. On April 12, 2006, this writer informed the State Film Commissioner via email that unless this document, which was supposedly presented to the Governor, Speaker of the House and senate President on January 1, 2006, was forthcoming, he would initiate a public records lawsuit.

On April 14, 2006, the State Film Commissioner provided a copy of the “Final Report,” which revealed that it had been prepared on April 12th, the same day that this writer threatened to file a Public Records lawsuit.

In short, a report that was mandated by Florida Statute appears to only have been prepared after this writer repeatedly made public records requests for this document, and then, the quality of the report was so lacking in information that it prompted questions as to its usefulness in accounting for the $2.5 million in taxpayer money it was supposed to account for.

2. During 2005/2006, the Governor’s Office of Film and Television awarded $1,911,117.00, in tax incentives to companies who requested confidentially under FS288.075, better known as Florida’s Confidentially Act. The identity of these companies, and the amounts that each received have been removed from public scrutiny through a misuse of this statute, and in the process has revealed a glaring problem of public accountability in the award of millions of dollars in tax incentives in Florida.

WHY PUBLIC ACCOUNTABILITY MATTERS

In April and May of 2005, Venevision Productions produced a Latin Telenovela in South Florida. A sizable portion of the production took place in the City of Pinecrest, an upscale community south of Miami that had long been popular as a film and print location because of the many upscale houses, and more importantly, large yards that many of these houses have, allowing easy access and parking.

During their time in Pinecrest, Venevision, along with Univision who was also filming a telenovela in Pinecrest, created enough disruption in the neighborhoods they were filming in that their behavior prompted a flurry of complaints from irate neighbors.

After several weeks of complaints and visits from Pinecrest officials, Venevision was served through the homeowner in whose house they were filming a “cease and desist filming,” order. They were the only company to be served, and there is no information on why Univision was not served, unless Univision had moved on.

As a result of this situation, the City of Pinecrest – which until then had operated without a film ordinance - undertook the process of creating of a film ordinance, which on it’s first reading before the City Commission last January would have all but prohibited any filming in Pinecrest.

Since the first reading in January, it has taken a serious commitment of time and effort by a small handful of film industry veterans to try and soften the impact that this ordinance would have on the ability of film and print companies to be able to film in Pinecrest – something that the city decided to prohibit once Venevision was served with the “cease and desist order.”

On June 27, 2005, less than 60 days after they were served with this “cease and desist” notice, Venevision Productions applied and qualified for a tax incentive for a new telenovela, entitled, Cosecha de Amor. According to the records provided by the Governor’s Office of Film and Entertainment they are in line to receive as much as $257,069.00.

As part of the Governor’s Office of Film and Entertainment application, Question 15 asks in part: “What kind of corporate citizen has the applicant been?”

In attempting to learn whether or not Venevision had revealed information about the situation in Pinecrest as part of their response to Question 15, I wrote Paul Sirmons, our State Film Commissioner on May 24th. Here is my question:

“I am writing to ask whether the Venevision Production Company which supposedly received $257,069 from the State of Florida as part of the 2005-2006 tax incentive program revealed in response to Question 15 of the application that their bad behavior over the month of April 2005, was responsible for the homeowner in Pinecrest whose house they had used as a principal location receiving a notice from the City of Pinecrest to "cease and desist filming in a residential district," and that their behavior, along with that of a telenovela from Univision - although Venevision was the principal company that engaged in bad behavior - subsequently prompted the City Of Pinecrest to undertake the creation of a film ordinance which some of us in South Florida are still having to deal with?”

Here is Paul Sirmons response:

“Venevision has not received any incentive funds yet for that production. The amount you quote is the maximum they can receive, only if their actual qualified Florida expenditures substantiate that amount. As you know, you and I spoke about the Pinecrest situation when the city was having its discussions about establishing an ordinance. It is probably a good thing to have an ordinance, so all parties know the boundaries and limits of what will and will not be accepted in certain communities, meaning chances of abuse are lessened from either side -- just sad it had to happen over a dispute. Regarding line 15, it is filled with six lines about previous production in Florida, its community involvement with certain educational establishments and its support and involvement with non-profit and charitable organizations in the community. To my knowledge, this show had no similar problems during its production.”

While correcting my impression that they had already received a tax incentive, it would appear in trying to decipher Paul Sirmons’ response, that Venevision did not include this information in their application. Of course I could be wrong, which is why I wrote Paul again asking him to be more specific. He has so far refused to answer my second query, which he could do with a simple, “Yes” or “No.”

If Paul Sirmons can’t or won’t answer whether a company that applied for a sizable tax incentive admitted to causing a serious problem during it’s last project as part of an application process for a tax incentive only serves to reaffirm a lack of plain speaking for which runs counter to what he, and his supporters continue to claim is his major strength as the state film commissioner. It’s a bureaucratic double speak response to a question that warrants a straight, “yes” or “no.”

Now, Venevision is far from the only telenovela company that has been accused of bad behavior in recent years. Just about all of the telenovela companies have been accused of trashing neighborhoods, using illegal aliens as actors and crew, paying sub-par wages, and generally being the worst neighbors in the film community neighborhood.

That’s not to say that in the result oriented world of film production we’ve all managed at one time or another to skate close to the edge and probably only escaped some sort of official sanction because there weren’t any public officials around at the time we screwed up. But for a company to engage in bad behavior for almost a month, resulting in repeated calls from irate neighbors, visits from city officials and finally having the home owner served with a “cease and desist” order, is not the kind of one-time, “We did what we had to do to get the shot,” kind of screw-up.

IN CONCLUSION

Bad behavior by any production company presents a problem for the entire film industry in this state. For South Florida, Venevision’s screw-up shut down Pinecrest for over a year, and resulted in some people spending a lot of personal time and effort trying to undo the damage.

On the positive side, Venevision seems from discussions I’ve had in recent days understood the problems they’ve caused and are beginning to monitor their behavior to reduce the impact that they cause when they move into a neighborhood for 6 or 9 months.

On the negative side, what if similar situation had occurred with a production company that had qualified for a tax incentive and whose identity Florida’s Confidentially Act had shielded? What if it was only discovered, long after the fact that this production company engaged in behavior that impacted adversely on a sizable segment of our industry, and waltzed out of town with a sizable tax incentive check from the state in the process?

How many people in Florida’s film industry would be upset then? How many film folk in Tampa would be upset if a film crew caused Hyde Park and Bayshore to be closed to filming? How many in Orlando would be upset if a film crew caused Winter Park to be closed to filming? That's how important Pinecrest was/is to Miami.

Florida’s Confidentially Act was not written or intended to provide secrecy in a situation such as this. We are talking about the give away of public money. Public money demands public accountability. Public accountability, as haphazard as the process might be, is the only way to protect this industry against companies that engage in bad behavior.

I believe that we have reached a point where you can’t trust government to police itself, especially an administration on its way out the door, or a new one waltzing in the door, which is where we now find ourselves for the next year and a half.

In the last two months, none of the information that I have dug up – although parts of it have been known either within state government or within portions of the film industry for some time – has been made public because the State Film Commissioner felt it his responsibility to report to this industry on what has been happening with this program, but because someone like me was willing to expend the time, effort and money to start putting the pieces of information together and circulating it to filmmakers across the state.

This is no way to run a program that’s responsible for passing out tens of millions of dollars of Florida taxpayer money, nor is it the best way to monitor the operation of this program.

From a clear and flagrant violation of state law, to favoritism, to questions of whether the Governor exploited the system to reward an ideological and financial supporter of the Republican party, and ending with deficient accountability and questions about accountability for past behavior, the first two years of tax incentives intended to support Florida’s film industry have left in their wake a series of troubling questions about the both fairness and accountability.

THE END OF PART I

WHAT’S COMING NEXT:

PART II: A piece that will detail the real financial costs of the tax incentive program whose working title is: “FLORIDA’S FILM INDUSTRY ON WELFARE: The High Costs Of Part Time Work.”

PART III: Draft legislation for next year’s Legislative Session, dealing with strengthening and developing a real Florida Film Industry.

In addition, I’ll probably send out occasional Crespo-Grams of information that I uncover along the way.

Have a nice summer and watch out for the hurricanes.

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www.alcrespophoto.com