August 16, 2018

What Might Have Been

Ten years ago, Michigan called Hollywood, and Hollywood answered
By Patrick Sullivan | July 21, 2018

A decade ago, as the state reeled amid a national financial crisis, Gov. Jennifer Granholm announced a program to generate jobs and spur the economy: Michigan would offer the most generous film credits program in the country.

The program started off looking like a success, and it peaked in 2010, Granholm’s final year in office, when $115 million in incentives were awarded.

Then Gov. Rick Snyder came into office. He rolled back the program amid criticism from conservative groups and lawmakers who decried film credits as a net loss to the economy. The state Senate Fiscal Agency released a report in 2010, for example, that estimated every dollar spent on film credits generated only 60 cents in economic activity.

Under Snyder, film credits were first drastically reduced, causing the film industry to retreat from Michigan, and by 2015 they were eliminated entirely.

Film credits proponents believe their loss marks an incredible lost opportunity for the state. Michigan didn’t give them enough time to develop a profitable industry, they say, and the cited studies showing poor returns missed most of the economic reverberations the film credits spurred.

As films like “Batman v. Superman: Dawn of Justice,” “Red Dawn” and “Gran Torino” shot downstate, Traverse City was poised to be one of the filmmaking centers in Michigan. Plans were in the works for a movie studio next to a marina on West Bay. A special effects company opened on Division Street. And young people who grew up in northern Michigan and were interested in creative careers scrapped plans to flee the state.

Northern Express sat down and talked about missed opportunities and what might have been with four local film-industry vets who lived through those exciting years.

 

Richard Brauer is a long-time filmmaker whose credits include Dogman and The Lost Treasure of Sawtooth Island. He also owns of Brauer Productions Inc. in Traverse City.

Brauer: Granholm was all about jobs. I mean, she was trying to push anything that would create jobs, including a sulfide mine in the U.P. I mean, there were some dark sides to that push. But that’s a whole other story. She saw firsthand how the film industry benefited other states — through tourism, through direct economics — so she decided, being gutsy and very progressive, to make the most inventive, most generous film credit in the nation: “If we’re going to do this, we’re going to do this big.” So she comes up with this 42 percent thing. Forty-two percent. It was so big — most of the other states were 25, possibly 30 — hers was 42 percent. It was a big deal.

Bill Latka grew up in Traverse City and moved downstate in 1978 while he was in high school. After college, he moved to Los Angeles, where he worked in production, first making commercials and, later, music videos, television shows for the Discovery Network, and feature films. Today he runs Storylicious, a Traverse City-based web content and social media provider.

Latka: The Granholm administration saw it. What other industry, when you have a devastated economy, can you literally flip the switch and not have to wait for five years for something to happen before you can start to employ people? Like, oh, advanced battery production? That was an idea that’s just starting to come to fruition now. They just opened a plant in Holland or something, right? Well, they’ve been talking about that for 10 years. The movie business, they flipped the switch, and they had millions of dollars flowing into Michigan overnight.

Clover Roy, a Detroit native and film industry vet who moved from Los Angeles to Traverse City to be closer to family, found a perfect film industry job in northern Michigan — and then watched it all go away. She spent months lobbying for the survival of film credits in Michigan.

Roy: Full disclosure: I came back for personal reasons, to be with my sister. I was a single mom without any support, not able to make ends meet all of a sudden, and she called: “Just come to Traverse City.” I lived in a basement for four to six months before I got my awesome job. I was able to start a new life because of film incentives. I didn’t come here for that, but it fell into my lap. And I saw the possibilities.

Latka: I worked in the Detroit area for seven or eight years and then I was with a company that decided we didn’t want to be in Detroit, we wanted to be in California. So we moved out there. I was doing TV commercials. We met someone who just moved to L.A. from Traverse City. One night, we were sitting around talking to all of our L.A. friends about Traverse City, about how it’s still the kind of place where you can send your kid out and say, “Come home when the street lights are on.” I was like, “Hey, is it still like that?”

“Yeah, it’s still like that.”

My wife and I said, “What in the hell are we doing in Los Angeles?” You know what I mean? This is when the film incentive happened, and I’m like, “Wait a minute, we could move back to this idyllic place. We can come [home to Traverse City] and do movies and do television shows and do this stuff?” And so we immediately started looking for a house, and we put up our house, and six months later we we’re here. So in August I’ll be here 10 years.

The film credits offered incredible incentives to filmmakers, but the program was complicated and rigid. Brauer saw a way to make smaller movies in northern Michigan.

Brauer: You had to give [the state] an estimate ahead of time. You had to have at least $100,000 to get in on this game. It’s like a poker game. If you had a $90,000 movie, that’s not enough — $100,000 gets you in. You project out in different categories where the expenses are going to go: Michigan hires, like jobs. Michigan resources, like hotels, car rentals, flights, food. And then there was non-Michigan expenses. And then you would give them all of these, and they look at each one, and they go down the list, scrutinizing them. The Michigan ones were scrutinized the most.

They would say, “Okay, yeah, yeah, yeah … Whoa, whoa, whoa, what’s this?” And then they would go down to the end, and they would say, “If this stuff you’re giving us is true, then we would expect to give you this amount back.” It was a very fair and equitable thing when it got right down to it.

Hey, I’m a taxpayer, too. I didn’t want them to just waste money on a bunch of stupid stuff. Man, they qualified the daylights out of these things. If I bought a cup of coffee, and I figured that was part of this movie I was working on, I better get a signed-in-blood affidavit from the owner of the restaurant — otherwise they would just discount it. I am not kidding you. They were ruthless.

Latka: It was a godsend. Michigan was — I don’t know if everyone remembers — in 2008, it was just after the financial crisis, Traverse City was not doing great. The [Traverse City] Film Festival had just started, so Traverse City was just starting to come back alive. The crazy thing was, I left in 1978. When I came back in 2008, it was very similar to the way it was when I left. Only in the last 10 years, it’s become this amazing place.

Traverse City Developer Ron Walters also heard about the film credit program and saw an opportunity. He put together plans to construct a movie studio lot in Greilickville to rival studios in Hollywood.

Walters: I had purchased the piece of property on West Bay with the idea of developing an office complex and marina in 2006. I started the process with the Corps of Engineers, DEQ, the township, county, brownfield authority, MDOT — all the different agencies — and right before things were getting approved the 42 percent … state of Michigan film credit was approved, and I had a friend — actually he’s my godson — who had a company in Culver City, Los Angeles. They did special effects, visual effects, and 3D, 2D-to-3D conversions on film, and his company was growing very fast. When this happened, he contacted me and said, “You should think about repurposing your building for something in the film industry.” So I did a lot of research. I went to L.A., I looked at a lot of the sound stages they have there. A lot of them are very old. The ones that are state of the art or newer are booked solid, and the ones that aren’t weren’t as much so.

Latka: I set up an office. I was above [what is now] the Workshop Brewery, which at the time was Right Brain. I had several young people that were looking to get into the film business. And I hired these young people. And then we started doing projects. And I pitched a show to the Science Channel, and I said, “Bring it here to Michigan,” and they said, “OK.”
           
So we started to do a show for the Science Channel out of Traverse City. And we brought that money here to Traverse City, and we were spending it with local people. And then I did production services for a movie called “Hideaway,” with Josh Lucas. I worked on that. I’m in the Directors Guild of America, and I assistant directed a $10 million film down in Detroit. That made my year, because I worked on this $10 million feature film. I never would have had that chance in L.A.

Walters: My commercial office building, up front, the plan became to make it into production offices, because whenever a production comes to a city, they have to secure sound stages for any of the internal shots, any of the green screen stuff. But they also have hundreds of people that work on the film, and that requires production offices. So it’s a very lucrative, very interesting business. You rent the stages for $5,000 to $10,000 a day, and then you rent them office space. And you have your catering if you want to provide them with a full service. Your craft services and catering are also part of the project. So I was including a high-end restaurant on the top floor, a commercial kitchen on the bottom floor — that way I would have been doing craft services and catering for the set, which was 150 feet away. And for the executives, they could go upstairs and have dinner or lunch, so it was a really neat combination.

Roy: Before people were open to understanding what it really was about, people’s first reaction was, “Hollywood elite entitlement! Why should we give money to the film industry? What about these poor people over here?” And I think, even our political representatives, that was their blanket view of the whole thing. And then, everyone wanted to see what we were all about. “Wait, a film company is opening up in Traverse City? Prime location right on Randolph and Division streets?” David [Kenneth, executive producer of I.E. Effects] put just an incredible amount of money into it. When these incentives came out, he said, “This is the way I’m going to get to show my kids Traverse City, Michigan, where I spent my summers as a boy.”

Walters: Throughout all this — I.E. Effects was David Kenneth’s company — I.E. Effects was prospering, doing very well, and one day he said, “Fox wants to come and look at your plans and see what you’re doing here,” because he was working on a film for Fox. So they have a scout that just looks for sound stage space, and then they would send someone to look for sites to shoot at, for the exterior stuff, and with all the water and what have you, the guy flew up, walked the site, we went to lunch, and he said, “You know, this is the most amazing place in the world.” It was mid-summer, and there were boats everywhere. And I said, “Yeah, we’re going to have a marina across the street. Your executives can hang out on their yachts if they want to do that.”

When Michigan eliminated the single-business tax, the film credit program had to change from a tax break to a reimbursement of expenses. This caused some people to become more critical of film credits because the state was cutting checks to filmmakers. Brauer, though, said the program was far from a free-for-all giveaway.

Brauer: The scrutiny got bigger. I’m not sure if it was because of that. It switched over to Treasury, and those guys wanted a return on investment. They wanted to see their ROI. So if they were spending this amount of money, they wanted to see it come back. And it doesn’t work like that. They wanted to see that money in a very short period of time. It doesn’t work like that. But as long as Granholm was around — and a very few others — to support this thing, it lived on.

Latka: First they tried to monkey with it. They went from 42 percent of a dollar back to 35 percent. And then they put these stipulations on that you had to hire a certain percentage of Michigan crews, which was unrealistic, because all of the Michigan crews were already working on all of the movies. So it was impossible to find Michigan crew; you had to bring people in. There were tens of thousands of people that travelled to Michigan to work. And they were renting places, and they were buying groceries, and they were paying taxes. The whole idea that the film incentive was not benefiting Michigan was a total Republican/Snyder administration construct, where they said, “We’re not making money off this film incentive.” Well, they didn’t look at the big picture.

Brauer: At the very beginning of this thing, my filmmaking comrades in L.A. were all saying, ’42 percent, you guys are nuts! You’re never going to sustain that.” That was basically the opinion of L.A. But then it didn’t fail. It was working. That’s when you got Clint Eastwood showing up with Gran Torino, a bunch of other films. There was one here that was a pretty good-sized movie — I worked on it — with Josh Lucas. Hideaway. It’s a good movie. It’s an art movie. Texas money. They decided to find a state that fit the bill, and they came to Michigan, and they shot it right on Old Mission Peninsula — all of it. Josh Lucas and James Cromwell. I got paid. A bunch of my crew got paid. There were a lot of local hires on the thing.

Roy: I watched [Sens.] Wayne Schmidt and Howard Walker, all the locals — everyone’s looking at us. “What are they doing? What’s that? That’s kind of sexy.” So everyone wanted to know. We were talking to photographer] John Robert Williams and [former Traverse City Film Festival director] Deb Lake and everybody in town. “What is this going to mean for us?” David [Kenneth] had an awesome, incredible vision. He was looking at Building 50 for a technology campus. His dream was to hire hundreds of young people, to teach them how to convert 2D to 3D frames. That’s what we were doing. We had hired 13 different digital artists, and some of them were from the [TBA ISD Career-Tech] Center. They were high school kids, and he trained them how to transfer. We were working on Harry Potter and the Deathly Hallows Part II and The Green Lantern. And all of that was happening when it first started. And then it all unraveled.

Brauer: Sam Raimi brought Oz to the new studio in Pontiac. This was like a $300 million movie. Because of the incentive, there was a group down there in Pontiac that built a brand-new movie studio that rivaled Los Angeles. I mean, when you use the term movie studio, it can’t be pole barn where you store boats. It’s got to be air-conditioned, heated, incredible amounts of electricity available, soundproofed, parking, hair, makeup, workshop, all that. It had it all. It was a big deal. At the time, the film incentive was offering incentives for infrastructure improvements also. So that’s why these things sprung up. And there were movies that could be made in the Detroit area, these guys thought it would be a good idea to build a movie studio. That was when the leadership in Lansing shifted, and the whole incentive came into question.

Latka: There was so much work here, specifically for young people that wanted to be in the movie business. They were moving back here. We had a world-class sound mixer that lived in Traverse City. Bought a house. He moved back from L.A. because of the film incentive, and he was working all of the time. Well, when they pulled the plug, the work disappeared overnight, because the film incentive wasn’t alive for long enough to build the proper infrastructure. It was only up and running for a few years.

Brauer: The marketing of the incentive gave way to the distraction of, “We need better roads. Roads suck in Michigan!” Yeah, they suck. So as soon as Snyder got in, we were in a whole different ballgame. He was more interested in keeping incentives for factories, boots on the assembly line, that kind of thing. The whole tutti-frutti movie industry made no sense to him, particularly. And roads were a big issue. The writer Mitch Album, he wrote a paper on this whole thing, he did the math: At the heyday of the film incentive, in 2010, the Michigan Film Office paid out about $110 million in incentives. Mitch Album concluded that that was the same as 40 miles of road repair. Forty miles. That’s it. And displacing that was this emerging industry where young people were finally calling Michigan their home and they were graduating from our universities and opening businesses, and all of this ancillary stuff was happening. They were getting going. They could have babies and buy houses and get married and stay in Michigan. You talk about an ROI? That’s an ROI! You’ve got to give it 10 years. Anybody would say you’ve got to give it 10 years.

Brauer: The Michigan Film Office started in the ’70s. That film office ran for 30 years. Three decades before the film incentives showed up. So the job of the Michigan Film Office was to be a liaison to filmmakers that might want to come to Michigan, to show them some sights, give them some ideas on locations, and just be a friend. Be a local ally. The film incentive shows up, and all of a sudden the local office has to be an administrator for all of this paperwork, which they were not necessarily predisposed to doing, but they did a good job with it, they did their best. Well, now that the incentive is gone, they are back to doing what they were doing.

Roy: At first, those guys, [northern Michigan politicians] Howard Walker and Wayne Schmidt, were very skeptical. Their arms were crossed. And then they walked through our doors at Randolph and Division, and they saw all of our computers, and that it was a brick building, the quintessential “brick and mortar,” the sign of real business and real-world economic development. They saw all of these kids. And some of our artists came from other places. They came from L.A. or New York. They were experienced. And we were paying kids $12 an hour, and it was like a paid internship for them through the Tech Center, through the Intermediate School District. And they were working on Warner Bros. films. When the likes of Howard and Wayne went through our doors and saw all this, that’s when they completely turned around. They left asking us, “How could we help you?” Because they got it.

Bauer: What is the ROI when you send somebody through a partially subsidized film program at the University of Michigan, and they graduate with a 4.0, and there’s nothing here in Michigan for them to do, and they move to L.A.? That’s the horrible twist to this thing. They were bitching about ROI on this thing, and they didn’t look past their nose.

Roy: My job lasted 18 months all together, and at least the last year or more of it was dealing more with [lobbying for] the incentives. I went a couple times to Lansing. I met the guys in Pontiac that started the big studio that completely fell apart. It was me and that guy and Wayne Schmidt in his office. Right before a big commerce committee meeting where they were voting on some stuff. And Wayne — I’m a flaming liberal, so I was out of my element completely — but he really came through. He really got it. He saw the economic development for his constituents. He’s the one that pulled out of nowhere, he said, “Yeah, 5 percent of every something-something needs to go to post-production.” Nobody knows about post-production. Nobody knows that that’s kind of the lion’s share of the budget for a film. That’s why you see, like, 750 names after any movie.

Brauer: So they were thinking, there’s no way that they can sustain this. We did. Until Snyder came into office. Snyder killed it, basically. So right during Oz, all this controversy got kicked into the fire, so here’s Oz, shooting in Pontiac, Michigan. Every frame of that movies was shot indoors in that studio. Every frame. There was not one frame shot outside of that studio. The average daily payroll of Oz was 1,500 people for a year almost. You think that doesn’t make an economic impact to that community? I was there a couple times, and there were guys with horses in the middle of the winter outside of the studio. They must have had eight or 10 horses standing around, and there were trailers and bales of hay and all this stuff, and there were 10 guys standing around these horses. And they were on call, in case that was the day they needed these horses. So you tell me that that didn’t make an economic impact? That’s just one tiny example.

So here comes our new administration. The incentive dies. Sam Raimi was really pissed, because they were going to pull his incentive. And the producers behind him were going to kill him. Evil Dead kill him. They got hoodwinked into coming to this state. They wanted to shoot it in L.A. He wanted to bring it here because he wanted to help the Michigan economy.

Roy: It was a five-year program, and after like two-and-a-half years, that’s when it started grinding the wheels to a halt. So they didn’t even give it the chance that it needed. Any economic development like that needs time to prove itself, or not.

Brauer: Even the people that used it, who predicted that we couldn’t sustain it, now say, “We told you so.” And that, right there, is fundamentally the worst part of this whole thing: We lost credibility as a state that’s open for business.

At some point, the script got flipped, and film credits were no longer seen by many people as a way to create jobs and spur the economy. Instead, they were seen as a handout to Hollywood fat cats.

Brauer: That’s what the perception was, yeah. The reality was that they hire a lot of local people. And the abuse part didn’t happen. They only give the major incentives for the people they hire locally. So the argument that it only made the studio fat cats money, that was just a perception. It’s like a lot of things in politics: If you say it long enough and loud enough, people tend to believe it.

And also the whole notion of abuse in general, there were some people who were scheming some abuses on this thing, absolutely. There is zero chance they would have pulled it off. Zero. There’s no chance it would have got through Treasury. Not even close. They checked everything. I did six movies without the incentive. I did three with it, because it was there. So I’m not making movies because of the incentive. I am here still. I was here before it. I’m here after.

Latka: When the film incentive went away, the work left, and when the work left, everybody left. I was one of the few that stayed. I didn’t go back to Los Angeles because Traverse City is an amazing place to live. I didn’t want to move my kids. By that time, they were just starting high school, and I didn’t want to move them again, because they already moved one time. Plus, I still have family in Michigan. We have in-laws in Reed City, and they are getting older, and my dad lives in Detroit. He’s getting older. But also, I saw the need for my skill set in Traverse City to help the kind of clients that I want to help, places like FLOW [For Love of Water], Groundwork [Center for Resilient Communities], Crosshatch, the National Wildlife Federation. I saw that there was a need for proper communications and videos. I had always done websites and social media stuff on the side because I’m interested in it.

Roy: Because I didn’t move here for a film industry job, it wasn’t like, “Oh no, now what film job am I going to find?” I was out of work for, like, 10 months, which was awful. And then I got a job as a financial recruiter for Northwestern Mutual Financial Services. For 20 months I was working as a financial advisor, and now I am in real estate, so the beauty and the quirkiness of northern Michigan is, if you’ve got solid soft skills, which most employers worth their salt realize are the most important kind and they can train the rest, I’ve been able to land on my feet to a certain extent.

Bauer: At the end of the day, it was a really good idea. I guess in hindsight it was too generous, which is kind of a nice thing to be faulted on I suppose, but it was too generous. I hope that if it comes back at some point, and it should, because there’s a number of incentives out there [for other industries], a ton of incentives in Michigan. The list is huge.

Latka: Michigan did it right, initially — they came in with the best incentive in the country, and that really got it started. But there was still plenty of work here when they rolled it back to 35. The thing is, every place that starts a film incentive, what you do is: Let’s start the work here. Let’s build the infrastructure, the studios, the equipment houses, the motor homes, and the caterers. Let’s get that stuff going, and then you roll it back. New Orleans has a great film incentive. It’s not the top of the country anymore — it’s marginal. But there’s still tons of work in New Orleans.

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