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Film tax breaks start

Incentive program hopes to keep production in California to help local economies.

July 29, 2009|By Zain Shauk

NORTH HOLLYWOOD — Experts are hoping for an economic jolt from a group of schmucks and a Chihuahua, among other players.

The films “Beverly Hills Chihuahua 2” and “Dinner for Schmucks” were named Tuesday as two of 25 projects that will receive state tax breaks meant to curb the effects of “runaway productions,” which could lead to an economic recovery in Glendale and Burbank.

The California Film Commission selected the projects and will offer the incentives to 30 movie and television productions this year that opt to shoot within the state, instead of pursuing generous tax incentives to locate elsewhere.

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Analysts, business owners and officials have blamed the problem of runaway productions for draining major studio spending from California and forcing cutbacks at the array of area businesses that serve the entertainment industry.

Economies in Glendale and Burbank are so tied to the industry that experts don’t expect a major turnaround from high unemployment rates — 9.9% in Glendale and 9.2% in Burbank — until studios begin spending on local projects and funneling funds to businesses like caterers, rental houses and cleaning services.

But California’s new incentive program, worth up to 25% of production costs for qualifying projects, may change that, said Jack Kyser, chief economist for the Los Angeles County Economic Development Corporation.

A film that meets the program’s requirement of costing less than $75 million to produce might seem insignificant compared with $200-million blockbusters, but will still create a significant number of jobs, Kyser said.

A $32-million project, for example, would create 141 direct jobs and 425 other jobs through increased activity at companies that benefit from entertainment industry business, Kyser said.

Because of the plan, businesses will begin to see a boost at the end of the year and into the beginning of 2010 as program participants begin to spend locally, said Kyser, whose corporation predicted the incentive plan would help spur a rebound in local economies.

Without the program, California would be in danger of losing large numbers of entertainment jobs to other states, possibly leading to the demise of a vital state economic engine, said Democratic Assemblyman Paul Krekorian, who created the plan.

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