Film Tax Credit Edit May Strike Boro Sets
Silvercup Studios’ boom days may be behind it without the New York State tax credit.
By Michael Lanza
It was dubbed recession proof – one of the few growth industries during an unprecedented downturn.
But boom may turn to bust and the City’s entertainment industry may fall victim to its own success after the state announced that a vital film and television tax credit fund had been exhausted four years early, sending producers fleeing.
No television pilots have booked shoots in the City this year, down from 19 last year and threatening the future of one of Queens’ most vigorous business sectors, according to Hal Rosenbluth, president of Kaufman Astoria Studios.
“This is crucial,” Rosenbluth, whose studio recently broke ground on a $20 million expansion, said. “We live in a mobile industry; they want to come to New York, but if the cost differential is too great to justify they will go elsewhere.”
Rosenbluth said generous tax incentives in other cities were luring worried producers from New York after the state began turning away applicants last month.
Gov. David Paterson expanded the program last year, raising the credit from 10 to 30 percent of labor related production costs. The move spurred a burst of growth at Queens-based Kaufman and at nearby Silvercup Studios. More than 125 productions took advantage of the changes last year, creating thousands of jobs and nearly doubling cash injected into local economies, according to a report by Ernst & Young.
Production spending rose from $940 million in 2007 to $1.8 billion last year, according to the report. The agency estimated that continuing the program could create and preserve more than 19,000 jobs and generate nearly $200 million in additional tax revenue, doubling the state’s investment. The City could expect to receive 6.4 times the amount invested through its own 5-percent tax credit, according to the report.
But while New York increased individual production funding, the state failed to increase the actual fund, which was intended to last through 2013. Now rapidly expanding businesses like Kaufman and Silvercup are facing a crisis, and Queens could share their pain.
“You’ve got the single greatest amount of stage facilities sitting in the borough of Queens. It has the greatest economic impact right here,” Rosenbluth said.
Elia Batas, who owns La Vuelta, a bistro in Long Island City, said as much of 30-percent of his business goes to Kaufman and Silvercup.
“A lot of our business has slowed down, but they seem to be at a constant,” Batas said.
Batas said his business would be forced to eliminate jobs, cut salaries or trim hours without revenue from the studios.
And at both Queens studios, continued uncertainty from the state could jeopardize not only new projects, but existing projects as well.
“The question now is whether or not existing shows, like ‘30 Rock,’ ‘Gossip Girl’ or ‘Fringe,’ which were all shot here, whether they will be able to get support from their corporate parent to re-up for another year,” said Stuart Suna, Silvercup’s co-founder.
Suna, whose studio announced a $1 billion Queens expansion in 2006, said that many companies would be making their decisions in May, leaving only a few short weeks to plan after the projected April 1 state budget.
Both Rosenbluth and Suna said that lawmakers need to restore producer confidence with an aggressive signal supporting the tax credit in order to maintain business this year. But mum is the word for many top Democrats as public discontent with corporate tax breaks surges.
“The state continues to receive applications for film and television tax credits, which will be placed in a queue should additional funding be made available to applicants qualified under the law and regulations of the program,” a spokesman for the governor said. A spokesman with State Sen. Malcolm (D- St. Albans) was not even aware that the fund had run out.
Of course, not every politician is keeping quiet.
“Allowing this program to expire would be madness,” said Assemblyman Mike Gianaris (D-Astoria), whose district houses both studios. “It is the one industry in New York that has been growing by leaps and bounds at a time of economic turmoil.”
Gianaris warned the industry was quickly reaching a moment of truth, and not including the credit in this year’s budget would be folly.
“We’ll be putting this industry at real risk and we’ll reverse the gains we’ve made over the last few years,” he said.