• Kevin Elliott

The tragic story of Michigan film industry

Part of the magic of Hollywood films is the ability to plant the seed in the viewer's mind that anything can happen. Whether it's zombie bikers exacting revenge on a Detroit suburb or a tear-jerking love story on the deck of a sinking ship, movies offer an escape from our everyday reality that's capable of evoking emotions and memories. It's no wonder that Michigan – the epicenter of a national recession in 2008 – turned to the film industry to help change the state's narrative.

“We needed jobs, and people were leaving out of state looking for jobs elsewhere. We were the only state with a negative population growth,” said former Michigan Senate Majority Leader Randy Richardville (R-Monroe). “We tried to attract investments in the movie industry in Michigan. Hollywood was very high priced for labor, and Michigan has Great Lakes that look like oceans. We have four seasons, countryside and inner cities. There are a lot of reasons to film movies in Michigan, and we made it extremely attractive by returning up to 42 percent of production costs. That was by far the biggest incentive offered in the United States. The administration supported it because anything to bring jobs was good, and the legislature went along with it.”

Most readers already know from the opening scene how the story ends: the corpse of Michigan's film industry is floating in a swimming pool.

Flashing back 10 years, a down-on-its-luck state was writing its own comeback story, in which metro Detroit would become the Hollywood of the Midwest. Cast as leading lady was rising political star, former Governor Jennifer Granholm, who had given up dreams of becoming a Hollywood actor herself before moving to Michigan. But, was it just easy money and abandoned auto facilities that Hollywood was after the whole time?

Back to 2019, there remains a community of creatives and crew members hopeful that Michigan will make its return to the silver screen with the help of the state's new leading lady and a partial restoration of the film credits eliminated by former Governor Rick Snyder.

Whether aspirations for Michigan's film and television industry will spawn a sequel is open to debate. Those ready for their closeups point to the success of the original plan, which garnered a slew of blockbusters and helped launch new careers and businesses across the state. Others say the long-term results of Michigan's film credits were a flop that shouldn't be repeated.

Although Michigan's former film credits were responsible for an explosion of film productions in the state that began in 2008 and ended in 2015, the first film shot in Michigan was MGM's 1947 musical “This Time For Keeps.” Shot at Mackinac Island's Grand Hotel the year before it was released, the movie earned more than $2.6 million at the box office. Four years later, Jimmy Stewart, George C. Scott and others returned to the Upper Peninsula to shoot “Anatomy of a Murder,” based on former Michigan Supreme Court Justice John Voelker's crime novel of the same name.

Between 1960 and 1980, just 9 films were shot in Michigan, including “Blue Collar” and “Hardcore,” which were written by Grand Rapids-born Paul Schrader, who also wrote “Taxi Driver,” “Raging Bull,” and many other critically-acclaimed movies. In 1981, University of Michigan graduate Lawrence Kasdan had already written “The Empire Strikes Back” when at least one scene in “Continental Divide” was shot in Michigan. Meanwhile, Oakland County native Sam Raimi was working on “The Evil Dead.” Michigan's connection to Hollywood was becoming evident, with Detroit getting its own closeup in 1984 with the release of “Beverly Hills Cop.” Between 1980 and 1990, at least 29 films were made wholly or partially in Michigan.

“Film is really our forte,” said Selam Ghirmai, director of the Michigan Film and Digital Media Office. “Most states have a film office. Ours has been around since 1979, and it's all about promoting Michigan as a great place for film production.”

Formerly named the Michigan Film Office, the original office was created to assist and attract incoming production companies and to promote the growth of the state's indigenous film industry. The office does that through special services, such as providing location photographs, helping with location procurement and clearance, acting as a liaison with local, county and state governments and working with contacts in the business, institutions and other assistance.

While film productions in Michigan picked up during the 1980s, those productions began dropping off in the early 1990s, as filmmakers in California began to be lured to Canada, which offered a favorable exchange rate and the beginnings of government sponsored tax incentives. Still, film production in Michigan remained fairly steady with more than 70 films partially or wholly produced in Michigan between 1995 and 2007, including “Grosse Pointe Blank,” “Escanaba in da Moonlight,” “Road to Perdition,” “American Pie 2,” “8 Mile,” “Upside of Anger,” “Transformers,” and others.

In 2002, Louisiana offered the first competitive film incentive in the United States, according to the National Conference of State Legislatures. To court the movie industry, the state offered a 30 percent tax credit on qualified motion picture expenditures with no project or program cap. The state also offered a labor tax credit in the form of a 5-percent credit for payroll expenditures on Louisiana residents. To qualify, filmmakers had spend at least $300,000 in the state.

As film productions began locating in Louisiana, it became evident that film and television makers would relocate if they were able to lock in a good enough deal. Other states, such as New Mexico, Georgia, Texas and others began following the lead of Louisiana.

While productions in Michigan were seeing a small but steady growth in the early 2000s, the state's economy had started a long spiral into recession. Looking for ways to retain graduates and add some stimulus to the economy, Michigan enacted what was the largest film tax credit in the country in 2008.

“Prior to the incentives trend, in the United States it was primarily a locations' game,” Ghirmai said. “It was about making the business of filmmaking as easy as possible and making sure they connect. Today the studios rely on a model that lines up with incentives. To be viable at the studio level, incentives are typically required.”

Since the elimination of Michigan's film credits in 2015, the state's film and digital media office has focused on promoting grassroots projects and the limited projections that come from out of state.

“Our goal, regardless of incentive status, is that we provide a good business climate for filmmakers, from those that are local, Michigan-based, or those that are looking for locations from out of state,” Ghirmai said. “We have a standard menu of services for any production, at no cost to the production. Most services revolve around locations and connecting them with talent and crews. We provide guidance for state and local permitting, and also provide complimentary location scouting from the office. That's especially important when courting out of state productions.”

Included in the office's production directory is more than 3,900 crew and vendors, and more than 6,100 locations and properties available for productions. The service allows businesses, private individuals, governments and organizations to list their property as available for projects.The office also offers promotional services used to get the word out about casting and crew calls as well as screenings and events.

In February, the office helped to promote the premier of “Arctic” at the Maple Theater in Bloomfield Township. The movie was produced by Timothy Zajaros Jr., of Farmington Hills, who now works in Los Angeles. In March, the office helped promote a made-for-TV Christmas movie set to be filmed in Frankenmuth that was hosting a casting call.

Local film offices throughout the state work with the state office to coordinate and promote productions, but none offer any sort of official tax credits.

The Detroit Film Office, which operates as part of the city's government, offers several incentives for productions that work in the city. However, those incentives were established after the end of the state film credits and utilize partnerships with private businesses in the city.

Adrian Tonon, who manages the Detroit Film Office, said city offices worked to see how to coordinate and save producers time and money on permitting and other services.

“Then we went to the private sector and said we can have Detroit film initiatives, allowing them to save on hotels and restaurants and other things,” he aid. “We are working with craft services and others.”

Tonon said many of the local incentives came as an effort to keep Comedy Central's “Detroiters” show in the city after the state's film credits were eliminated.

“It's not a credit program, so the funding doesn't come from quality of life services,” he said. “The old bill came from police and fire services… this is responsible and outside the box. We have been doing well without taking funding and creating a savings program, and we have landed some great stuff here.”

While Tonon said most productions aren’t the same size as the Hollywood films that came to Detroit during the tax credits, he said there is consistent commercial work, with sound stages and local production companies here working.

“It's still a great place to be right now,” he said.

Both Oakland and Macomb counties had formed county film offices during the state's film credit program.

Maria Zardis, with Macomb County Planning and Economic Development, said she still fields calls for the county's film office. Most often, the office assists with the permitting process.

“We aren't seeing the big feature films, but still fielding requests for assistance,” she said. “Sometimes we get a couple calls a week, and then nothing for months.”

In Oakland County, the county's film office position hasn't been staffed for more than 8 months.

In 2007, prior to Michigan's film credit going into effect, 5 films were shot at least partially in Michigan. In 2008, the Michigan Film Office received 221 scripts, 136 incentive applications and 71 approvals, with 35 productions being completed. By the following year, 44 different states, as well as Puerto Rico and Washington D.C., offered some form of film and television incentive.

Michigan's film incentive, which was scaled back and eventually eliminated under former Governor Rick Snyder, was pitched by Governor Jennifer Granholm in her 2008 State of the State speech as part of an economic stimulus plan. At the time, she said the program was designed not just to attract film production facilities, but to grow industry activities that support film production, create jobs and train workers.

Granholm, now a political commentator and speaker, declined a request for an interview with Downtown Publications. However, her 2011 book, “A Governor's Story: The Fight for Jobs and America's Economic Future,” offers a window into her penchant for the movie business.

“At 19, I took off from our family home in San Carlos and drove 8 hours south to Los Angeles in a yellow Ford Courier pickup truck to try my hand at acting,” she wrote in the book. “One of the thousands of blonde wannabes in Hollywood, I took classes at the famous American Academy of Dramatic Arts and dreamed of becoming the female Lawrence Olivier. But those were the days of Three's Company and Charlie's Angles, and the cattle-call auditions for pretty girls willing to show off their assets and the vapid encounters with seedy agents and producers left me disgusted and angry.

“Meanwhile, I was supporting myself as a lowly clerk in the customer service department at the Los Angeles Times and as a tour guide on the back lots at Universal Studios. Increasingly disillusioned with acting, I spent the summer of 1980 on the patio behind the office at Universal Studios, cherishing the moments between tours when I could read political philosophy and civil rights history, marinating in me a growing desire to change the world.”

The Michigan Film and Digital Media Incentive consisted of a package of dozens of bills that culminated in Public Acts 74 through 87 of 2008. In their original forms, the new laws included a 40-percent subsidy for covered personnel expenses, with an additional 2 percent available for projects located in one of Michigan's 103 “core communities.” Above line staff, such as directors, writers and producers, were eligible for a 40 percent credit on salaries regardless of Michigan residency. Below line staff, such as craftsmen, technicians and engineers, received a 40 percent credit if they were Michigan residents, or 30 percent for non-residents. The construction industry could also receive a 25 percent subsidy for capital improvements for the creation of new film industry-related facilities, capped at $20 million. The workforce development incentive also provided a credit of 50 percent for on the job training expenses of Michigan residents. The total 42-percent film subsidy was by far the largest offered in the United States at the time, and intended to draw movie productions to Michigan.

“We are investing in this new industry for several reasons,” Granholm said at the time. “Every dollar spent in film production will generate up to $3 in economic activity in Michigan. These new laws are timed perfectly to attract business to Michigan from Canada, where the higher Canadian dollar is causing filmmakers to move production to alternative locations. We also believe the film industry can give our economy an immediate shot in the arm while it takes years to reap the benefits of other economic development incentives.”

In terms of bringing in films, the incentives did exactly what they set out to do, with film producers pouncing on the incentives to help offset movie productions at a time when private investment was becoming more of a challenge.

In 2008, film producers spent about $125 million in the state, employing 2,763 people and receiving $47.9 million in incentives, according to the state film office. In 2009, more than 125 productions applied for the film credit, with 62 approved and 46 completing work that year. About $223 million was spent on Michigan productions, with about 4,000 hired crew and 4,000 extras and day players, resulting in $68.7 million in incentives being given. In 2010, 66 productions were approved for incentives, with 45 completing work, generating about $293 million in spending, more than 5,300 crew jobs and more than 8,100 extras, with $115 million in incentives given out that year.

Rick Hert, director of the West Michigan Film Office, said the office was looking at 20 scripts in 2010 with about $30 million in projects expected to come to the west side of the state. Since then, he said there are occasional commercials and a few local filmmakers that work with the office.

“We still remain a local contact if I can help, but a lot of people have moved out of state,” he said. “The crew list is shorter, but we still work with the state film office.

“Tax incentives have gone out of favor in Michigan and some other states, but they could still work in Michigan and be a large financial opportunity for the state, but they need to be done right,” he said. “It's an industry you can grow, but you have to be in it long enough.”

While the program was successful in bringing new productions into the state, there were concerns that the state wasn't seeing increased revenues to the point that the program was even paying for itself.

“The May 2010 consensus revenue estimates forecasted net revenue impact on the budget to lower revenue by $30.8 million in fiscal year (FY) 2008-09, $91.4 million in FY 2009-10, and $111.8 million in FY 2010-11, with even larger reductions in general fund revenue in FY 2009-10 and FY 2010-11, of $100.7 million and $125.7 million respectively,” Michigan State University Professors Steven Miller and Abdul Abdlkadri said in a 2009 economic impact study on the film credits. “Based on the experience of other states, the revenue costs of these incentives are expected to grow substantially over the next few years.”

Essentially, the report found “the nature of the credit and resulting activity is such that under current (and any realistic) tax rate the state will never be able to make the credit “pay for itself” from a state revenue standpoint, even when the credit generates additional private activity that would not have otherwise occurred.”

In 2011, under then Governor Snyder, the film program was capped at $25 million per year. The number of approved projects dropped to 24, with 15 completed that year, generating an estimated $201 million in spending, with 3,350 hired crew and 12,000 extras and day players, $75.6 million in incentives awarded, $54 million of which was approved in 2010.

In December of 2011, Snyder signed into law a revision of the program that capped incentives at $25 million. The revision also obligated the film office to report to the legislature on specific movie projects that it finances and openly declare the criteria used to award subsidies.

After 3 more years of capping incentives and production slowing in Michigan, the incentives were finally cut in 2015, with previously authorized incentives only paid out after that year.

Richardville, who pushed to retain some of the incentives, said he believes the state could have remained competitive in the film industry if incentives had been scaled back to provide 26 to 28 percent credits. However, others wanted better returns on the state's investment.

“When adding all the economic impacts, it was about a break even point, and we could show that. We were also negotiating with major motion picture producers to whittle down the percentage more and still be competitive,” he said. “The next step when new legislators came in, and their viewpoint was there wasn't a solid return, and the governor wanted to phase it out.”

While the short-term intent of the film incentive program was to give the state an immediate economic injection, the longer term plan was to develop Michigan's own workforce to support the industry, including the development of movie studios. While the incentives spurred the opening of 3 movie studios in Michigan, they have all since been shuttered. In 2017, the Michigan Motion Pictures Studio in Pontiac sold off its remaining items that had been part of productions such as “Batman v Superman: Dawn of Justice,” “Oz the Great and Powerful,” the Transformer series, and others.

The Pontiac studio was planned to be a major economic engine for the area and state as a year-round studio that would create more than 3,000 jobs. However, since those jobs were dependent on filmmakers using the studio, the total number of jobs couldn't be guaranteed. Still, the state backed the studio, ultimately making taxpayers responsible for nearly $20 million in debt owed by the studio. By the summer of 2011, the studio had about 200 positions, nearly all of which consisted of temporary construction workers.

Other studios and businesses dependent on the film incentive program have since closed shop or refocused direction to smaller productions and other mediums.

Richardville said legislators on the far right wanted the film credits eliminated, despite progress being made. Ultimately, they wanted Michigan to compete without the cost of the film credits.

“There has not been any desire to bring it back,” he said. “The (Pontiac) studio has been sold to a tier one auto supplier. Much of the educated, trained workforce that worked in the movie industry has gone to other states to start over.”

Richardville said he had hoped the state would have invested more than the $25 million cap that was given under the Snyder administration.

“We should have went to about $100 million, and that would have attracted more productions to come back to Michigan,” he said. “If you understand basic economics that those opponents didn't heed, you know if you take money from a different economy and inject it into yours, it has greater investment than moving it around in your own economy. A million from California is different than Michigan money being spent in Michigan, and that can grow each year. That has a greater increase factor on the economy.”

A February 2009 economic impact study of the state's industry and credit conducted by professors at Michigan State University concluded that state expenditures related to film incentives would double in the first few years, but increase at a decreased rate through 2012, at about $187.7 million. The report found the stimulus would generate about 2,922 new jobs, annual wages equal to about $189.5 million and boost the total state output by about $335 million annually.

“Findings of this study show that Michigan film expenditures generated multiplier effects of 1.66 for employment and 1.43 output in 2008,” the report stated. “As film production infrastructure develops in Michigan, these multipliers are expected to expand to 1.9 for employment and 1.79 for output. This expansion in multipliers is the result of deepening value chains, as Michigan will likely capture a greater proportion of total production budgets as its infrastructure develops. Evidence of infrastructure development has already been shown through investment in education and production facilities.”

The analysis made showed not that it didn't take into consideration the full spectrum of the motion picture and digital media production, such as video game productions, which would be likely to follow. Nor did it take into consideration the economic impacts of Michigan's tourism industry as a result of film tours.

Charles Ballard, an economics professor at Michigan State University, said proponents of the film incentives have said that by subsidizing the industry it would bring “cool and techie” people to the state. However, there are several problems with that notion.

“One, unless you think you need to subsidize it forever, you would like the subsidy to be a seed that helps to get the industry going and then it would be self-sustaining, and clearly that didn't happen,” he said. “There are a lot of economists, probably a consensus of economists, that believe any time you give a tax break to one industry, you have to tax someone more or you need more revenue.