On-Site Filmmaking: a Boon to States' Coffers

IT'S noontime. The 17th-century village of Salem, Mass., perches on a hill, the blue waters of the Atlantic lapping at its edge. Though no people are in sight, the buildings, homes, and gardens look recently occupied. Pigs roll in the mud, dogs lounge in a doorway, and tassels of corn wave in the fields. What's wrong with this picture?

It isn't the real Salem.

This 1692 "village" was built by 20th-Century Fox here on Hog Island in Ipswich, Mass., for the film "The Crucible." The set is empty while crew and cast - including Daniel Day Lewis, Winona Ryder, and Paul Scofield - take a lunch break. This $20-million-plus production of Arthur Miller's play about the Salem witch trials is being directed by Nicholas Hytner, with a Miller screenplay.

Two months ago, none of this existed: Hog Island had no village - not even electricity or running water. The logistics for making the film here seemed impossible. Studio executives considered sites in Canada, where costs are cheaper because of the exchange rate. But Massachusetts, eager for the hearty boost to the economy that comes with on-site filmmaking, assembled an unusual package of incentives that Fox executives couldn't pass up.

Massachusetts's case shows how far states now go to compete for film-production money. While California has always led in the number of films shot in North America, other states and cities have recently intensified the competition for a share of the booming business. And film commissions are growing more sophisticated in dealing with production companies.

The entertainment industry spent $21.5 billion on movie production in the United States and Canada in 1992 (the latest year figures are available), according to the Alliance of Motion Picture and Television Producers (AMPTP), a trade group based in Encino, Calif. Of that, $16.3 billion was spent in California, while $5.1 billion was spent in the rest of the US and Canada.

That doesn't include money spent on television shows, commercials, music videos, and documentaries, as well as programming for CD-ROMs, interactive and cable TV - media that are rapidly expanding the industry.

But movie money is special - like "manna from heaven" - as those in the industry call it.

"States have recognized that this is a viable form of economic development," says Leigh von der Esch, president of the Association of Film Commissioners International (AFCI) based in Los Angeles. The AFCI currently has about 230 members.

Movie production also requires only a small initial investment. Those in the business call it a "clean industry," meaning states don't have to build new infrastructure - roads or sewage systems - as they do for other development projects, such as those for the automobile industry.

"[Film production] doesn't use up local resources, but there's a tremendous infusion of money" back into a community, says Pat Kaufman, deputy director of the New York Governor's Office of Motion Picture and Television Production.

New York is having a stellar year after losing several big production deals to Canada. Last year, more than 180 movies were shot in the state, which took in more than $4 billion in direct revenue from movies, TV production, commercials, and music videos.

In the case of "The Crucible," which is entirely filmed in Massachusetts, sources estimate that anywhere from $10 million to $15 million will be generated.

About half that amount is spent on payroll, much of that for local union workers. During preproduction, of the 150 construction workers, more than 50 percent were from the area, says the film's producer, David Picker. Fox also held a two-day open call for extras - more than 4,000 people showed up.

Hotels and restaurants where the cast and crew stay and eat take in much of the rest. The Five Corners deli in Ipswich usually does about $100 a night in business. But it has taken in double that, sometimes triple, since "The Crucible" came to town, says Andrew Thompson, an employee.

"The entire support mechanism that makes this [Salem] village stand and makes this village operate is all done locally," says Mr. Picker, former head of United Artists and Columbia Pictures.

Location fees are part of the equation, as well. The Trustees of Reservations, the conservation trust that owns Hog Island, says it is getting $40,000 from Fox. But sources say when all is done, the trust will receive about $140,000 total from extra fees. The trust will also have its name mentioned in the credits, and if there is a pre-release opening here in Massachusetts, the trustees will use it for a fund-raiser. (Fox has promised to return the island to its original state after filming.)

A spinoff benefit from the movie business is tourism, which some admit is difficult to quantify.

"For a state that depends on a high profile, like Florida, the amount of money generated from any internationally distributed film or TV show can mean millions and millions of additional [tourism] dollars," says John Reitzammer, executive director of the Florida Entertainment Commission in Miami Beach.

Reruns of the TV show "Miami Vice, which is syndicated worldwide, plays a part in drawing Italians and Germans to the Sunshine State, he adds.

Other states that have seen increases in tourism due to a film, according to a report by the AMPTP, include:

* Louisiana. "Steel Magnolias," which premiered in November 1989, was filmed in Natchitoches. The local tourism commission said the movie was the principal reason for a 39.7 percent increase in visitors in 1990.

*Kansas. Tourism at Fort Hays, where Kevin Costner set off for the plains in "Dances With Wolves," increased 25 percent in 1990-91 compared with an average 6.6 percent for the previous four years.

*Utah. After the film "Thelma and Louise" hit theaters in the summer of 1991, Arches National Monument in Moab reported a leap in tourism from a 3.3 percent increase in 1990 to 19.1 percent in 1991.

Currently, there are about 230 film commissions worldwide, compared with about half that a decade ago. That includes all 50 states, the District of Columbia, Puerto Rico, the US Virgin Islands, plus a handful of commissions in Canada, Europe, Asia, and Central America.

While many in the business contend that the rivalry among states is more collegial than bare-fisted, film commissions are playing hardball when it comes to attracting business.

"[Film commissions today] are much more sophisticated than, 'Hi y'all. Here's a picture, and a brochure, and a map, and please give us a call when you're in town,'" says Kathleen Milnes, vice president of public affairs for the Alliance of Motion Picture and Television Producers.

Film offices now have Home Pages on the Internet; they fly producers and location managers to their states and spend several days and thousands of dollars showing them around; they take screenwriters on tours; and they sponsor screenwriting competitions, Ms. Milnes says.

That doesn't include the string of cash incentives states are throwing at producers, such as: low-interest loans, film financing, property-tax abatements for studio development, free permits, free police and fire protection, and low-cost location fees.

And because the cost of making a production is skyrocketing, production companies are keen on getting such breaks.

"The costs are really getting very high, and there's enormous pressure to make the pictures as economically as possible," producer Picker says.

In 1985, the cost of making an average motion picture was $16.8 million, according to the Motion Picture Association of America in Washington. In 1994 that cost has more than doubled to $34.3 million. Some in the industry contend that while crew rates have stayed much the same, the actors' salaries have skyrocketed.

In the case of "The Crucible," Massachusetts officials literally summoned the troops to win the bid.

"'The Crucible' is a trendsetter for what a commission will do to bring in business," says Robin Dawson, director of the Massachusetts Film Office.

Charles Harrington, location manager for the movie, says studio executives were reluctant to film in the Bay State because of its history of labor problems and because of the difficulty of the site.

"The studio executives turned to me and said, 'Find this somewhere else, but not on an island,'" says Mr. Harrington, who has scouted film locations for 14 years.

Harrington scouted from South Carolina to the tip of Nova Scotia. Both Maine and Nova Scotia were contenders, he says. Filming in Nova Scotia would have cut production costs by roughly $7 million to $8 million because of the exchange rate.

(Salem, Mass., wasn't a possibility, Harrington says, because it was too modern, and historians argue that the witch trials didn't actually take place there.)

When the Massachusetts Film Office got wind that Fox might be heading north, officials there addressed the problems "head on," Harrington says. "It was really a case of the Massachusetts Film Office doing more than I've seen any state do to get a movie in."

In April, the head of the film office, the president of the Teamsters Union, and the lieutenant governor of Massachusetts flew out to Los Angeles to meet with Fox's vice president of production. There, they talked out a labor deal.

Still, the bigger obstacle was filming a movie on an island. Not only did it not have water and electricity, but the tide changes 13 feet during the day, making the half-mile waterway between the island and the mainland practically impassable at low tide.

Fox inquired about renting commercial transportation, but "the numbers were so beyond what we were able to afford that it became a non-issue," Picker says.

Enter the National Guard, which is lending a floating barge to transport props and supplies to and from the island. (Regular boats are used for the cast and crew.) Fox is paying the salaries of the 12 soldiers it takes to operate the barge plus fuel for eight weeks of preproduction and six weeks of filming on the island.

"We couldn't have made this movie without this," Harrington adds. "We would have spent millions on [commercial] barging."

But the Massachusetts Film Commission's golden goose is what it calls its "fee-free" program. The state owns 6 percent of the real estate in Massachusetts, and that property is rental free for film productions. In addition, the state owns eight vacant hospitals. It gave Fox free rent at Danvers State Hospital, which it is using for production space, a prop house, and wardrobe storage.

Without the fee-free program, Ms. Dawson says, the state would not have landed two other motion pictures that will be filmed here soon: "Celtic Pride" (Caravan Pictures) and "To Gillian on Her 37th Birthday," starring Michelle Pfeiffer (Tristar Pictures). Including these films, five motion pictures have been shot in the Bay State this year.

The tug-of-war over movie dollars hasn't always been the norm. For decades, producers stayed close to Hollywood. But that changed in the 1970s and early '80s.

Labor issues and the difficulty of getting permits for filming in California sent producers to other parts of the country and Canada. In addition, production equipment became more portable, producers started making action and drama movies, and audiences became more sophisticated.

"You can no longer get away with portraying the brown hills of California for the green hills of Vermont," says Bill Arnold, director of the North Carolina Film Office in Raleigh.

As a result, film centers are starting to flourish in other parts of the country and the world. These centers have a large crew base and production services and facilities that weren't there before.

As of June 1995, the total number of motion-picture jobs in the United States hit 262,000, nearly double the number in January 1990, according to a recent report in Fortune magazine.

California has felt the effects of these changes. "It's just a drop in the bucket in terms of what's going on in California," says Pam Powell, deputy director of the California Film Commission in Hollywood, referring to the amount of money the rest of country is taking in. But she does admit that California had to refocus its mission and work not only on bringing in new business, but also on keeping the business it already has.

North Carolina was actually one of the last states to open a film office. Many people viewed it as a far-fetched idea in 1980, Mr. Arnold says.

Today, North Carolina has become one of the fastest-growing centers for film and TV production in the US. In 1994, it took in $357 million in direct revenue from 39 feature films. It has eight motion-picture studio complexes, two backlots, and more than 1,200 crew and technicians.

"The states that do the best make themselves look and smell like nongovernment entities," says Mr. Reitzammer of the Florida Entertainment Commission.

Formed two years ago, the Florida commission is the first public-private partnership between the state and the local film industry. (The Los Angeles film office recently formed a similar partnership.)

Texas, too, is a competitor, having had 19 movies filmed there in 1994, and grabbing such movies this year as "Ace Ventura II: When Nature Calls," which is supposed to be set in Africa, and "Courage Under Fire," starring Denzel Washington.

Another competitor that can't be ignored is Canada, specifically Toronto and Vancouver, where a movie can cost one-third less due to the exchange rate (US$1: Canadian $1.29).

British Columbia, for example, has become one of the largest centers for shooting US network TV shows and movies. In 1994, it took in just over $401.9 million in direct revenue from the film industry.

"The region has managed to attract these productions with no tax breaks and no financial incentives, says Peter Mitchell, director of the British Columbia Film Commission.

With Canada's stepped-up role in film production, states have felt the pinch.

"Canada definitely hurts," says Ron Verkuilen, a scout for the Illinois Film Office in Chicago. It's hard for people to compete with the exchange rate and a "very active government," he says.