Tax Credits Could Lead to Maui Film Studio

Tax credits could lead to Maui film studio

February 21, 2011 – By ILIMA LOOMIS, Staff Writer
Article from: The Maui News

WAILUKU – A Hollywood production company is proposing to develop film studios on Maui and Oahu – if the state Legislature approves new tax credits for film infrastructure development.

Officials with Relativity Media told lawmakers in Honolulu earlier this month that they hoped to start work on a 31-acre Maui film studio later this year, and an Oahu facility of the same size in 2012. They urged legislators to adopt the proposed tax credits.

Under draft legislation being considered in the House of Representatives, developers could receive a tax credit of 25 percent of their costs for “media infrastructure projects” in Honolulu, or 40 percent for projects in Neighbor Island counties.

“The question is, what is the state getting back? The answer is jobs, jobs and jobs,” said West Maui Rep. Angus McKelvey, who introduced the bill along with Central Maui Rep. Gil Keith-Agaran and Waikiki Rep. Tom Brower.

Lawmakers made changes in the bill to address concerns, including eliminating a proposal to significantly increase tax credits for film production, and adding a provision that would allow the state to reclaim its credits if the film doesn’t go forward, and other taxpayer protections, McKelvey said.

While there was still resistance to approving new tax credits while the state struggles with a budget deficit, he said the proposal had an “excellent” chance of moving forward.

“I’m really going after this, because I see this has a major potential impact to the state of Hawaii,” he said. “But it’s got to be done right.”

House Bill 1551 was passed out of the House Economic Revitalization and Business Committee on Thursday and referred to the House Finance Committee.

A similar proposal is moving forward in the state Senate, although without a specific amount of tax credits attached.

Senate President Shan Tsutsui, who represents Central Maui, said legislators were taking a cautious approach to the proposal.

“I think it’s still early,” he said. “It’s kind of a new concept, and we want to see what the economic impact would be.”

He said he had asked colleagues to allow the bill to move forward to get more information from film studios and from state finance officials about what the tax credits would cost.

“We think this may be a possibility to benefit Maui,” he said. “We’re looking at ways to create jobs, and this might be one of them.”

Senate Bill 1550 has been passed out of the Senate Committee on Economic Development and Technology and the Tourism Committee, and referred to the Ways and Means Committee.

In their presentation to the legislators, Relativity Media officials said they hoped to build a 31-acre film studio on Maui, with an additional 10-acre back lot. (They did not provide a specific location on the island for the project.) The studio would include 10 18,000-square-foot stages, along with production and post-production office space. The entire project would have a $193 million production budget, according to the presentation.

A second, identical facility was proposed for Oahu.

In a handout with the company presentation, Relativity Media says it has released 126 films and earned $15.3 billion in worldwide box-office receipts. Films listed include “The Fighter,” “Mamma Mia!,” “Despicable Me,” “Iron Man” and “Hancock.” The company has film studio, television, music, digital media and talent management divisions.

Company officials said they planned to partner with Shangri-La Business Group on construction of the studios.

McKelvey said the proposal was being driven by people in the film industry who wanted to bring their operations to Hawaii. He said many film professionals already live part time in Hawaii, and many would prefer to work here as well, noting that Relativity Media founder Ryan Kavanaugh owns a home on Maui.

“Once the studio’s done, you can do a film from beginning to end in the state of Hawaii without going back to California,” McKelvey said.

The bills pending before state lawmakers also have the support of the administration of Mayor Alan Arakawa, said county spokesman Rod Antone.

“The film-related measures before the Legislature will benefit the entire state of Hawaii if passed by greatly expanding the film industry here,” he said. “It has the potential to put many people back to work and to train many more for well-paid movie and television production positions.

“We know our representatives and senators understand this,” he said.