Even BYUtv is looking at filming elsewhere, as Utah’s $8M budget for film incentives can’t keep up with demand

(Photo courtesy of Paramount Network) Pete Sands (left), Mo Brings Plenty, Gil Birmingham, Cole Hauser, Kevin Costner and Wes Bentley in “Yellowstone.”

Disney wants to produce more TV series and movies in Utah — but it’s looking elsewhere. Oscar nominee Taylor Sheridan would like to film his upcoming movie in Utah — but production will take place in New Mexico. BYUtv is exploring options for producing TV series in Georgia or Canada.

Why? Because Utah’s tax incentive program for film and television is limited to $8.29 million a year. And compared with the demand — and the additional millions some other states provide — that’s not much to offer an industry that considers incentives a key part of the bottom line.

Mary Ann Hughes, Disney’s vice president of film and television production planning, told a recent meeting of the Governor’s Office of Economic Development, “You will not find the productions going anywhere without incentives. It’s become an integral part of our planning.”

Disney is budgeted to get Utah incentives estimated at $3.7 million for its new series “High School Musical: The Musical.” But if a pilot that Disney shot in Utah last year, “The A Girl,” gets picked up as a series, the company says it will film elsewhere, because the likelihood of Utah having several million dollars more in incentive money available is slim, due to the limited budget and other projects (including Disney’s).

“Tax credits are a big driver of our decision-making,” said Susette Hsiung, executive vice president of Disney Channels Worldwide.

BYUtv filmed Season 1 of its upcoming show “Dwight in Shining Armor” in West Valley City, but it’s reportedly considering moving to Georgia or Canada. BYUtv managing director Michael Dunn didn’t want to comment directly on “Dwight” and said Utah “remains at the top of our list of production options.”

But he added that BYUtv “must consider other locations outside of Utah, particularly because of the lucrative tax incentives offered. These additional incentives dramatically offset our limited budgets,” he said, and they "are critical for the long-term viability of a series.”

Utah “has attracted more business than the incentive will support at this point. So BYUtv starts looking at going to Canada,” said Matias Alvarez, one of the producers of “Dwight.” “It’s just crazy.”

The Motion Picture Association of Utah — where Alvarez is a board member — will lobby the upcoming Utah Legislature and Gov. Gary Herbert to provide more money for incentives. Sheridan and actor/director/producer Amy Redford said they’d do whatever they can to help make that happen.

“Anything I could do that could possibly help the Legislature understand this, I'm eager to do,” Sheridan said.

Getting it made in Utah

Utah’s incentive program is “conservative,” according to Virginia Pearce, director of the Utah Film Commission. It rebates up to 25 percent of the cost of goods and services that are bought in the state, and of the salaries of Utahns on the crew.

Producers submit an estimate of how much they plan to spend in the state and — if approved — incentive money is budgeted by the Utah Film Commission. If the project doesn’t go into production, it doesn’t get anything. If it spends less than expected, it gets less — and that’s determined by a postproduction audit.

The film commission has to budget carefully because “we have run out the last couple of years,” Pearce said. “We’re kind of a victim of our own success.”

Disney’s Hughes pointed out that, in 2018, Season 3 of “Andi Mack” received a $4.8 million rebate, and “The A Girl” pilot got $400,000. Those payments, combined with its estimated 2019 rebate for “High School Musical: The Musical,” are $610,000 more than the annual budget of Utah’s incentives (albeit spread over two years).

“And this is just the Disney Channel,” Hughes said. “It causes us to have some tough conversations” about taking productions elsewhere.

One common pushback on increasing incentives is “why would we give Hollywood people money?” Alvarez said. He finds that frustrating.

Utah’s incentives support the hiring of Utahns, Alvarez points out — not “Tom Cruise coming here and taking millions of dollars out of the state.”

Studios have to pay stars big bucks regardless of where films are produced, Redford said.

“The six people that make a lot of money on a film are going to make that money no matter where you go,” she said. “Their deals are not contingent on the incentives.”

The employment contracts of the crew, however, are.

The incentives are “not giving money to millionaires,” said Sheridan, the creator/writer/producer/director of the made-in-Utah TV series “Yellowstone.” “It’s giving money to construction workers and drivers and catering companies and electricians.”

Sheridan employs up to 110 construction workers, 45 electricians and 40 drivers at a time on “Yellowstone,” which has been approved for more than $7 million in incentives in each of its first two seasons. Both that show and “Andi Mack” are receiving deferred payments, which allow the film commission to pay out incentives of more than $2 million over three years. But that still comes out of the $8.29 million budgeted annually.

And that’s one of the reasons Sheridan said he can’t afford to make his upcoming film (which he’s keeping under wraps) here — incentives just aren’t available for a movie with a budget “in the $50 million range. That’s a lot of money to spend in a state,” he said.

Even if only half that budget was spent in Utah, a 25 percent rebate would amount to $6.25 million — 75 percent of Utah’s annual incentives.

‘It really is about the economy of Utah’

In Utah, innumerable businesses — from the arena that’s home to the Utah Jazz to the Walmart down the street — receive some kind of tax break. Offering the same benefit to film and television productions is an investment, Redford said.

“It’s not just about Hollywood saving money," she said. "It’s really about supporting and nourishing an industry that could really give Hollywood a run for its money. It really is about the economy of Utah.”

According to Pearce, a recent study indicated that for every dollar spent on film incentives, $7 is added to Utah’s GDP, or gross domestic product, the value of goods and services produced within the state.

The increase is generated not just by what each production spends in the state — with at least 75 percent of its budget not rebated — but by “the crew member who gets paid, who takes his wife out to dinner, who buys a new car, who is able to live and work here instead of living and working in L.A.,” Pearce said.

“Yellowstone” “employs hundreds of people, and the vast majority of them are local,” Sheridan said. “And the ones who are coming in, they’re renting properties, they’re standing in line at the grocery store. They’re staying here. They’re moving in.

“It’s just a money dump,” he said with a laugh. “We show up and spend an extreme amount of money, employ a workforce and then leave. And showcase the state.”

Movies and TV shows filmed in Utah are sort of accidental advertisements. Tourists are still visiting East High more than a decade after the third and final “High School Musical” movie was released.

“We’ve done some studies, and 30 percent of tourists that come to the state said that some kind of television show or movie influenced their decision,” Pearce said.

Redford plans to shoot the film “Cowboys and Indians” — which she called “sort of a cultural collision between Hindus from Queens and ranchers from the southern part of Utah” — in the state this spring.

It will be, she said, “a love letter to all that Utah has to offer — a big advertisement to come and spend your vacations in southern Utah and enjoy all of the riches.”

But she added: “If I can’t say to the investors, ‘OK, I get to save that 30 percent on your money with the incentives,’ then they’ll say, ‘Then we’re going to go to New Mexico.’ And I can’t … totally argue with that.”

She said she’s “sweating a bit” because she fears “if a couple of Disney films come in, then that knocks all of the independent filmmakers out. It’s like, don’t tell anybody how wonderful Utah is to shoot because they’re going to suck up all the [incentive] money.”

A look at the competition

There’s a reason that all the Marvel superhero movies, all the “Hunger Games” movies and a slew of TV series — including “The Walking Dead,” “MacGyver,” “Dynasty,” “Stranger Things” and, yes, “Atlanta” — film in Georgia.

There’s no cap on Georgia’s incentives, which provide up to a 30 percent rebate and apply to the salaries of both Georgians and non-Georgians. In the 2017-18 fiscal year, that state paid $800 million in incentives to 455 productions, which spent $2.7 billion in the state. The governor’s office estimated a total economic impact of $9.5 billion.

“Georgia’s rebate — it’s completely changed the movie business,” Sheridan.

Georgia easily outspent New York ($420 million) and California ($320 million) and New Mexico ($50 million). At the other end of the spectrum, Michigan eliminated its incentives in 2015, and production there has virtually ceased.

But Utah’s conservative approach looks good compared with what’s happened in New Mexico.

That state grants incentives of up to 30 percent, and there’s no cap on the amount productions can qualify for — but there is a $50 million cap on what the state can pay out each year. So New Mexico owed film and TV producers $180 million at the end of 2018, a figure that’s expected to more than triple in five years. (It may take Sheridan years to get the rebates on his upcoming film.)

Netflix has purchased a production studio in Albuquerque that is expected to bring 1,000 jobs — with help from $14.5 million in tax incentives from the city and the state.

Utah also competes with the U.K., Australia and New Zealand. Between the provinces and its federal government, Canada alone distributed more than half a billion dollars in incentives last year, a figure Pearce doesn’t ever see Utah approaching.

“I don’t think it makes sense for a state our size and the diverse economy that we’ve built up,” she said.

‘Make a real impact’

Still, expanding the film and TV business would only be good for Utah, said Sheridan, a Wyoming native who moved here ”to make a living in movies and not live in California.”

“Aside from clogging up some traffic in spots, I don’t know the negatives. And I think the positives greatly outweigh that,” Sheridan said. “All we do is run around and just leave a trail of money behind us.

Productions don’t leave “any residual trash or any toxic waste to clean up or anything,” Alvarez agreed. Another benefit to expanding incentives and the industry in Utah, he added, is keeping talented young Utahns home.

He’s carved out a 30-year career as a director/producer working mainly in Utah. But he’s the exception.

“I see tons of kids graduating from [Brigham Young University] and [Utah Valley University] and the [University of Utah] in media production who don't have anywhere to go in Utah,” he said. “The best ones end up leaving and going to L.A. or Georgia. A lot of those kids have family here, they grew up here and they want to stay in Utah, but there are just no jobs here in that industry — or at least not enough jobs.”

Redford, the daughter of Robert Redford, moved back to Utah to establish a production company. She said there’s a huge amount of talent here, “and the kids that go to film school should be able to then put all of that talent back into the state. But a lot of them are getting to a point where they say, ‘You know what? There’s just not enough work. I’ve got to go.’”

Pearce said she’s proud of what the Utah Film Commission has been able to accomplish. Still, she told a meeting of GOED, “Our biggest concern right now is just the cap size.”

Sheridan would like to see rebates upped to 30 percent and the cap removed. And he’d like to see incentives applied to above-the-line costs (cast, stunt performers, producers) as well as below-the-line (goods and crew members).

“It would entice even more productions,” he said. “That’s what Georgia has done, and it’s how they’ve been so successful.”

Redford suggests greater incentives for shooting in “economically challenged areas” and a bump for using local music talent “so you can turn these really talented young musicians into composers and writers.” She also like the idea of an expat program, which would allow people born and raised in Utah to qualify for incentives even if they left the state to find work elsewhere.

Alvarez, too, wants Utah to make a bigger commitment.

“It’s like you’re dabbling in it and you have this small incentive, but it’s not enough to make a real impact,” he said. “I feel like it’s a half-measure that we’re stuck with right now."

UTAH FILM AND TV TAX INCENTIVES went to these 16 projects in 2018:

“The A Girl” • Disney Channel pilot

“Andi Mack,” Season 3 • Disney Channel series

“Belly of the Beast” • Documentary

“Cipher” • Scripted film

“Dwight in Shining Armor,” Season 1 • BYUtv series

“The Happy Worker” • Scripted film

“However Long” • Documentary

“Jane and Emma” • Scripted film

“The Night Clerk” • Scripted film

“Out of Liberty” • Scripted film

“Prescription for Love” • Scripted film

“Snatchers,” Season 3 • Streaming series

“Shoelaces for Christmas” • BYUtv movie

“Sole” • TV movie

“Willard” • Scripted film

“Yellowstone," Season 2 • Paramount Network series