Despite incentives, official optimism, S.F. film industry takes tumble in ’06 

After three major movies were filmed in San Francisco in 2005, Mayor Gavin Newsom declared that "film in San Francisco is back." But he may have spoken too soon because, despite new incentives to filmmakers, it was "quiet on the set" in The City in 2006.

A booming industry in the 1990s — with a production costs high of $461 million in 1996 — the industry began to decline in 1999, reaching an all-time low in 2003 and the first half of 2004, when no major picture was shot in San Francisco.

Following a series by The Examiner in 2004 about the failing industry, Newsom overhauled The City’s film office, hoping to breath new life into the industry.

In 2005, three major pictures — "Pursuit of Happyness," "Rent" and "Zodiac" — shot in The City had production costs reaching $151 million and sunk about $60 million into the local economy.

But 2006 was a repeat of 2003, with no major film shot on The City’s streets.

"It’s been not a stellar year," said Stefanie Coyote, executive director of the San Francisco Film Commission.

Coyote said the film industry is "bottom-line driven" and that San Francisco cannot compete with other states and other locations, such as Vancouver, Canada, that have a lower cost of living and offer better cost-breaks for film productions. New Mexico, for example, offers a 25 percent refund on film crews’ salaries. She said the larger incentives offered in other states are "siphoning business off of California."

In 2004, local politicians put their clout behind an effort to revive the sagging film industry, and as a result, the Board of Supervisors adopted a rebate program in 2006 that allows film productions to recoup city fees. The reimbursement is capped at the amount the production generates in sales tax. There does not appear to be much interest in the nine-month-old rebate program. To date, only one film production, valued at just $1 million, has an application pending.

City Controller Ed Harrington said the incentive program was never expected to resurrect the film industry.

"It wasn’t going to change drastically the behavior of folks and bring back the film industry to San Francisco," Harrington said. "We just don’t compete very well on costs."

Coyote, and other film industry insiders, say the only way to revive the local film industry is for the state to step up and adopt a competitive film incentive program of its own, making it more affordable to shoot films. "San Francisco would be the biggest winner because people really want to film here," she said. Nowadays, more productions are opting to make use of San Francisco’s iconic landmarks by taking exterior shots over the course of just a few days and filming the bulk of the movie elsewhere.

As a result of the film industry’s decline, local film-related businesses have taken a hard hit.

"The Bay Area lost 200 film-related businesses, about 100 in San Francisco alone, and many of our keys had to leave our end of the business and take jobs at the big theaters," said David Hikim, president of the Bay Area Film Alliance.

Local prop maker Sean House said he was rarely without work in the Bay Area in 2004 and 2005, but that 2006 "was for me personally the worst year in the film industry and television industry." House said he had to head down to Los Angeles to find work.

In 2005, the largest film production was recently released "Pursuit of Happyness." The $70 million production was estimated to have spent $22 million locally and created the equivalent of 400 jobs.

Luring moviemakers

San Francisco’s tax credits and incentives for film production within The City are minuscule compared with other cities, officials say.

San Francisco:

» Total amount eligible for rebate may not exceed the total amount paid in taxes while filming in San Francisco.

New Mexico:

» A 25 percent tax rebate on all production expenditures. If something cost $100, the refund is $25.

» A no-interest loan up to $15 million per project.

New York City:

» 10 percent refundable tax credit from N.Y. state.

» 5 percent refundable tax credit from N.Y. City.

Louisiana:

» 25 percent tax credit for film investment larger than $300,000

» 10 percent credit on salaries of residents.

British Columbia:

» 18 percent rebate on British Columbian labor.

Source: Association of Film Commission International and Motion Picture Association of America

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