Question Time

Pointed questions about the situation surrounding the Iowa film tax credit scandal

The Tom Wheeler trial as well as the other trials that have taken place due to the Film Tax Credit scandal have answered a lot of questions but not all, and have raised many more. There are many pointed questions I can think of that I would like to ask the various people who had a part in creating the problem. (Asking these questions with the aid of a pointed stick would be especially satisfying.)

To Michael Blouin, the first head of the Iowa Department of Economic Development (IDED) that Tom Wheeler served under (during the Vilsack administration) I would like to ask this:

Why did you hire Tom Wheeler in the first place while ignoring the 40 or so other applications for the job of Iowa Film Office manager? You didn't renew the contract of previous Film Office manager, Steve Schott, and instead appointed Tom Wheeler without any review of the many applications. Why?

While there may have been applications in the pile of people that were just as qualified as Wheeler, there likely were people with better experience, yet you skipped over these people. Tom Wheeler's experience in the film business consisted of working as a Production Assistant at Fox Animation in the Editorial Department. Did you even bother to find out what this job entailed?

A Production Assistant (PA) is the lowest rung on the ladder. These are the people who get the coffee and do the filing. Tom Wheeler never was on a motion picture or television set, never worked on locations, never dealt with film budgets, and never did many of the things that he would later be asked questions relating to when he went to work for you. He was having trouble with the job long before the film tax credits entered into things or before you moved on to another position elsewhere.

So, tell me again why you hired him? Was he someone's well-connected relative? Did one of your bosses tell you to hire him and to pay no attention to all the other applicants?

I really want to know. Please tell me.

To the members of the Iowa Legislature:

My question to you is not why did you pass the film tax credit bill? With the competition from other states for film projects and the dollars they brought, passing this bill made perfect sense. No, my question - questions, actually - to you are these: Why did you write a law that concerned taxpayer dollars with such vague language? Why did you not include funding or qualified staffing to adequately administer such a program? And finally, why are you now pretending that you had nothing to do with it?

Both major political parties in both houses passed it with a majority voting for it. Now, rather than showing any true leadership and fixing its flaws, you prefer to pretend that it doesn't exist and hope that it will simply go away.

To Michael Tramontina, the second director of the Iowa Department of Economic Development that Tom Wheeler served under:

Just where were you during this big mess? Sleeping at your desk? Were you really so clueless as to think the Film Office was just some fun little tourism thing and that the film tax credits were just some vague abstract thing that the legislature had talked about once? And why did you panic and resign once the issue of luxury cars came up? (Note to self: If ever visiting Beverly Hills with Mike Tramontina, don't go anywhere near a Rolls-Royce dealership. It could give him a heart attack!)

If Tom Wheeler was unable to handle the film tax credits himself, why did you let him? Why didn't you provide staffing for him? And if you didn't think he was the man for the job, why didn't you replace him? You know, division heads have that power. Why didn't you use it?

To Tom Wheeler, the now former manager of the Iowa Film Office:

While I know you suffered greatly through the ordeal of being fired from your job and through the time of your trial (they don't call them "trials" for nothing!), to say nothing of your time at the Iowa Film Office, there are still questions that need to be asked.

Why did you not seek more help from the film community during your term as manager when it became apparent that you were in over your head? I am not just asking about the time when the film tax credits became part of the job. I'm talking about your whole term as manager. Why did you mostly rely mostly upon the internet for information when you could have called people in the know directly who could have given you much more informed answers? There is a lot of information on the internet, true, but it is by no means complete nor necessarily accurate. Was it a puffed up sense of pride from having your first well paying job and a "I can do it all myself" attitude that made you approach your job this way?

And when the film tax credits came into being and your higher ups not only refused you the money and the proper staffing to administer it - in fact cut your Film Office budget - why didn't you just quit? It certainly would have appeared the honorable thing to do and in truth would have been. You could have possibly used your Film Office credentials to find another job in the film industry. Why did you try to be a hero when you were so obviously unprepared and unarmed for the situation?

To Tom Miller, Iowa Attorney General:

Why didn't you provide any legal assistance to the Iowa Film Office during the time of the film tax credits? Were you somehow expecting Tom Wheeler to know all about this subject or about the law in general? Why did you allow your office to be used as a tool to make Tom Wheeler a scapegoat and deflect attention from the other responsible parties who should have known better? Why did you make it your job to protect the powerful in state government at the expense of Iowa taxpayers?

To Chet Culver, former governor of Iowa:

Did you pay any attention at all to what was happening in the various departments under your care, or were you too busy keeping up with the doings of the Green Bay Packers? Why did you decide to make no effort at all to fix the film tax credit program problems once you awoke from your slumber? To use words you might understand, why did you forfeit the game when it was still only at the beginning of the first quarter after noticing that the score was not in your favor?

You could have frozen the film tax credit program for only a limited period of time - time enough to regroup, fire whoever needed to be fired, hire whoever needed to be hired, do whatever triage necessary to get things moving again, and then work with all the parties involved to fix the problems for good. You can walk and chew gum at the time, can't you? (Don't answer that!)

Instead, you froze everything for essentially forever with no attention given whatsoever to the possible consequences of your actions. Then you had the nerve to try to use it as an issue for your re-election campaign with your tough guy declaration about Iowans not being made into suckers.

Are you surprised you lost the election? I'm not.

To the great silent majority of the Iowa film community:

I'm talking about those who simply sat back while this whole thing was going on without raising a finger to fight back for a chance for a satisfying way to make a living. Why didn't you do anything? What was so important that you couldn't even take 5 minutes to write a legislator or send a "letter to the editor" expressing your thoughts? There were plenty of you around when times were good. You were lining up at the craft service tables, grabbing the pay checks, the glamor of the visiting celebrities, and enjoying the camaraderie of the set. But when all of this was threatened you decided to hang back and let others do the leg work. Why?

The few who did try to do something and did speak up need more than the occasional "Atta boy!" from you. The need more than a "thank you". They need more than an apology from all above. They need their lives and opportunities restored. Who is going to do it for them?

To all of those I've referred to above and to all of those reading this article:

The problem with the film tax credit scandal is that it just didn't affect the Iowa Film Office, it didn't just affect the well being of the Iowa Department of Economic Development, and its effects did not stop at the Culver administration. It affected the whole state of Iowa and in its wake took down several other Film Offices and film incentive programs in other states. It put a black eye on Iowa in the eyes of the rest of not only the country but of the world and not just in the film community.

Film producers no longer trust the State of Iowa for anything. Who can blame them?
In the film community what happened as a result of the film tax credit scandal was the equivalent of the dropping of an atomic bomb. Iowa may as well contain deadly radiation as far as they are concerned. Nobody wants to film in Iowa any longer, at least professionally anyway. The fallout is going to last years, if not decades to come.

Another Monday at the Tom Wheeler Trial or "Tom Goes to Wonderland"

I used my day off again to attend the Tom Wheeler trial. This time I went for the whole day. In the morning I went with Jay Villwock and for the afternoon portion I went by myself.

A lot of what was revealed in today's session was very capably reported by KCCI-TV on their website in this story:

Film Office Director Talks Experience, Budgets, More
http://www.kcci.com/news/28961656/detail.html

There is a very good video clip included that give a good sense of the sort of support that Tom was receiving from the head of the Iowa Department of Economic Development, Mike Tramontina. (Gene Hamilton posted the text of it in the previous post below.)

I will attempt to fill in things I saw that didn't get reported.

When I arrived the first witness for the defense was just finishing up. She was part of Dennis Brouse's Changing Horses Productions from what I could gather but I didn't catch any of her testimony.

The next witness on the stand was Kristina Swanson who had worked for producer Bruce Elgin primarily as a Unit Production Manager. I saw her many times when I worked on the film "Splatter". The prosecution asked about the use of "deal memos" and she said that the use of those is pretty standard. He asked her about her salaries for "The Offering" and "Splatter" and again didn't unearth anything out of the ordinary. I suppose he was hoping that the salaries would be uncommonly high for what the fair market rate would be. She said, if anything, they were on the low side. He confronted her with the fact that the state credited the amount of $77,000 while her actual pay was $28,000. She responded that she was surprised and saddened by this. All in all it was great testimony - for Bruce Elgin's trial. However, since it was instead Tom Wheeler's trial it was a "dollar short and a day late". (When is the prosecution going to realize whose trial it is?)

Then it was James Watson, the Council Bluffs CPA who worked for Wendy Runge during the production of "The Scientist". All I got from the testimony (I was pretty tired so I may have missed something) was that there had been no direct communication with Tom Wheeler. All of the communication had been via email to Tom and to Jim McNulty about how the Film Credits worked.

Finally Tom Wheeler took the stand. Defense attorney, Angela Campbell began by making it clear to Tom that he wasn't required to take the stand and by doing so he could be cross-examined by the prosecution. Wheeler made it clear that he was aware of that and that he didn't have anything to hide.

Questioning began with questions about his background. I found out (there's more detail in that KCCI news story linked to above, by the way) that he grew up in Norwalk, and started off when he went to college trying to learn Engineering but found he wasn't up to that so switched to a liberal arts education finally having a double major in Sociology and Religion. He took a graduate level creative writing class and participated in a fellow student's independent film as an actor. Upon graduating he moved to the southwest and was able to get a Production Assistant job at Fox Animation, 20th Century Fox's feature animation unit. He was able to move up some and ended up in the Editorial Department as a Departmental Assistant reading soundtracks and doing a few other miscellaneous duties. He lost that job when the division was closed. He moved to San Francisco with many of the other people who had worked there and tried to get work with some of the other studios such as Pixar and Warner Brothers but was unable to break in. He was able to get some work from an event company but ultimately couldn't afford to live in the expensive bay area. He ended up packing up and moving back to Iowa. After a few small jobs (motorcycle shop, landscaping, photo department at Walgreens) he found out about the job at the Iowa Film Office being available and got it. It was a substantial increase in pay.

What got established then was what the job was when he started and how it changed once the film incentive bill was passed. The job described to him was a marketing and customer service job which he was able to do. There was no orientation given to him. The closest to training he was given was the employee handbook. In it he found about the prohibition of state employees receiving gifts and he abided by it, even if it did create some awkward moments. The only other information he got was from previous Film Office manager, Steve Schott and what his immediate supervisor could provide. He was basically on his own for most of learning what the job entailed.

His responsibilities involved maintaining the Production Guide, answering questions via phone and email from film people and the general public, putting productions in contact with relevant Iowa people, and working on a location database. When he started major feature productions came to Iowa about once every two years.

The Film Office had a membership in the IMPA (Iowa Motion Picture Association) and the fee was paid for by the state. Tom joined the Iowa Scriptwriters Alliance (ISA) which he paid for himself. The Film Office was part of the International Association of Film Commissioners (which Tom was expected to participate in). He represented the Film Office in visits to IMPA, as well as visits to the Iowa Digital Filmmakers Guild (IDFG) in Iowa City and informed members of things going on in the state and worked to try to get them involved. He attended annual conventions of the Film Commissioners representing Iowa and promoting it as a place to do production.

Then the film incentives came into being...

Having talked to film commission people in other states and seeing what was going on, he was all for some sort of film incentive in Iowa since it would promote what he understood the Film Office's mission, indeed the mission of the whole Iowa Department of Economic Development, - the spending of money in Iowa. He was finding it difficult to compete with other states because they had film incentives and Iowa did not. Opportunities were being lost. However he wasn't the one to bring it up with the legislature. IMPA and other production entities in Iowa were the ones to approach the legislature about this. Tom Wheeler's role in all this was research for whoever asked for it. He looked up what other states were doing, what worked or didn't, what the incentives were, and how various programs were set up.

There were two failed attempts to pass film incentive legislation before it finally passed in 2006.

When Tom Wheeler joined the Film Office it was put in with Tourism. Later, once the film incentives were in place, it became apparent that Tourism wasn't up to the task of handling the business needs of film productions. Wheeler had a bit of a struggle getting the IDED to move it in with business but finally accomplished it.

Tom Wheeler testified that most of the learning of his job was by trial and error. This did not change with the passing of the film incentives. The film incentive bill did not provide any additional funding to provide for the expenses of administering such a program. The budget for the Iowa Film Office did not increase after the Film Incentives passed. In fact the budget was cut drastically.

Tom Wheeler testified that he had no training in either law or accounting. He entered the job with no experience with film tax incentives (in fact, these were new to everyone). He had never seen a film budget nor had any understanding of them. He testified that he relied heavily on the expertise of others within the IDED and other areas of state government such as Revenue and got as much help as he was able but many would only go so far and left him on his own after a certain point. He testified that at meetings about interpreting the film incentive statutes he was the least informed of everyone. He testified that he had only a "layman's understanding" of much of what he was confronted with.

When the film incentives passed, one of the things about them is that there were retroactive. There was no time provided to develop the proper materials (forms, applications, etc.) after they were passed and consequently for some films already shot within where the incentives were retroactive to the materials had to be improvised. Tom Wheeler had some help developing the rules and forms but much of it was left to him.

After the incentives passed his phone calls and emails increased exponentially. He was only given a limited amount of space on IDED servers to store Film Office files and this was soon exceeded. He at one point had to purchase with his own money an external hard drive to back up his files. It had a half terabyte capacity and that wasn't even enough. His email inbox, in the screenshot shown at the trial, showed over 11,000 messages.

It was established during testimony that Tom Wheeler made a great effort to keep records on everything and was constantly developing systems to keep track of the ever mounting volume of data. And this was while everything kept being changed. The content of applications were constantly updated as new information had to be adjusted for. Contracts on the other hand were not to changed more than once a year. The reason given by those who were involved with contracts at IDED was so that all the changes could be made at once. Of course, if you look at things, this was a problem because if something was wrong it would have to wait up to a year to be corrected. (The cars would be such an item.)

Tom Wheeler testified that it wasn't long before he went into reactive mode - that is, reacting to the current crisis rather than planning ahead - putting out fires, in other words. He testified that interpreting the statutes and administering the incentive program seemed straight forward at the beginning but turned out to be anything but when he actually did it. The program never stopped evolving even after he was fired.

The last of the testimony was truly breathtaking - a virtual descent into Wonderland. As mentioned before everything seemed straight forward at first as far as how the law was written and how the program was to be administered. That is until you get lawyers involved with it. The trouble started with "Peacock" with the term "Iowa resident" (if I remember what I heard correctly. The lawyers for that film told Tom Wheeler that programs in other states were interpreting the meaning of the term differently than how Tom understood it and was presenting it to them. Tom described how he had literally run to all of his various supervisors and told them of his error and how he had said they could do what they wished with him (fire him) if they needed to but that they needed to correct the problem first. The problem was one that could have cost the states millions in a lawsuit. During this part of the testimony it was mentioned that the terms "Iowa based company", "resident", "residency", "investor", "financial", "participant", "project", "qualified expenditure", - even "tax payer" were not defined in the law and were open to differing interpretations. Leave it to the lawyers! Tom Wheeler was definitely in over his head in all this. Who wouldn't be in such a crazy "Alice in Wonderland" situation?

Interview with Kent Newman from the weekend

There was an interesting interview with Kent Newman, the former president of the Iowa Motion Picture Association (Jay Villwock is the new one) about the current state of Iowa's film industry. It was on KCCI-TV's Newsmakers program.

Here's a link to Part One of the interview:

http://www.youtube.com/watch?v=BDUK1Q6HK7M

and here is link to Part Two:

http://www.youtube.com/watch?v=AyO8MxEzQmA

An Afternoon at the Tom Wheeler Trial

Since I had the day off today, I went down with Jay Villwock to the Tom Wheeler trial. We were able to join the proceedings in the afternoon.

The defense attorney for Tom Wheeler was cross-examining Vince Lintz, the former Deputy Director of the Iowa Department of Economic Development (IDED). From the way the questioning was going, I had guessed that it was the defense's witness, not the prosecutions because for the most part the answers couldn't have been more favorable to the defense's case.

The judge from what I could tell appeared to be the same one who had presided over the Wendy Runge trial. I got a vibe from his of being fair and impartial and that his mind wasn't made up in support of either side. Wheeler's attorney, Angela Campbell, was a very sharp lawyer during what I saw and there was a lot more action during this portion of the trial than I had expected.

The main thing that was established through the questioning was that Wheeler was overwhelmed and overworked and that the people above him at the IDED were in many ways clueless or asleep at the wheel. Many examples of what he had to do, what he was expected to do, and what kind of support he received from his higher-ups was given with thorough, respectful questions asked to confirm things.

Even early in the film program, Tom Wheeler was overwhelmed and needed assistance but was not provided the additional staff that was needed. And then the onslaught happened after a cap was set and a total of 122 applications were submitted to the office. As an example of the number of documents required for just one film to establish expenses three bankers boxes of receipts were brought onto the courtroom floor. And this was just for one average film. It was emphasized how long it would take to go through all of this and how unreasonable it was to expect one person to do this alone. (I recall it took a team at the Attorney General's Office at least 6 months before they could even start to bring any charges.) There was mention of phone voice message boxes being full and unanswered, both for Tom's office and cell phone (that's a LOT of messages). Wheeler's attorney recounted all of the various jobs he was supposed to do and it sounded like enough for at least 3 people to keep busy to me. Practically every question the defense attorney asked about responsibilities ended with the answer "Tom".

There was evidence presented to show that Tom Wheeler was not the "inside man" the prosecution has claimed him to be but rather that he was making strong efforts to tighten the program and to identify and eliminate the loopholes. It was established that Tom tried to work with people to make changes in the rules to make the program run better and that he worked with legislators. It also established that he did not write the law. In fact it was made clear that he had neither the legal training nor the training in accounting that was needed for what he was asked to do.

The issues of the cars was brought up. You remember those, don't you? The Land Rover and the Mercedes - the vehicles that started this whole scandal? It turns out that there was nothing in the law as it had been written nor in the contracts made with producers that excluded these purchases - the ones that got the press and the Culver administration into such an uproar. It was shown beyond a doubt that leasing and purchasing of motor vehicles was allowed under the terms of the law and the contracts. There was no mention of how they were to be used or what kind of vehicles could be purchased. Have you ever wondered why no charges have ever been brought up concerning these vehicles? If you didn't before, you do now.

Toward the end of the session the prosecution tried to counter some of the arguments of the defense. A job review form was exhibited that showed that Tom Wheeler had not filled in an area where it asked if he needed additional staff to do his job. After the evidence in emails from earlier in the program, this omission didn't seem to carry as much weight. Given the work load it certainly seems possible that Wheeler could have either forgotten to fill it in or was at the point of throwing up his hands and not bothering because of the futility of asking. That is at least my impression.

I'm sure I've probably have left some things out from the afternoon's proceedings but that's the gist of a lot of it. Tom Wheeler's trial is set for three weeks and this is the second week. I'll be off work again next Monday and will try to attend and see what I can give as an eye witness report.

-Dave

Tom Wheeler trial finally underway

After being delayed 4 times at least, the trial of Tom Wheeler looks like it may be finally beginning, according to this article on WHO-TV's website:

http://www.whotv.com/news/who-story-film-head-court-date-20110804,0,6415666.story

There seems to be a feeling from many people that the idea of this trial is to "throw Tom Wheeler under the bus" and leave higher-ups of his from the Iowa Department of Economic Development (IDED) and members of the Culver administration, including former Governor Chet Culver himself, unscathed by the scandal with total blame assigned to Wheeler. We'll have to stay tuned to see how all of this plays out. Besides the Tom Wheeler trial, there are 3 other known trials that have been reported by the press.

Iowa Film Featured Prominently at the Rural Route Film Festival in New York

Iowa is featured quite prominently in this article in the New York Times about the Rural Route Film Festival in Queens (in New York City):

Filmmakers Head to the Country, in Several Countries

http://www.nytimes.com/2011/08/05/movies/rural-route-film-festival-in-queens.html

Wendol Jarvis, former and future Iowa Film Office chief is interviewed!

I discovered this new audio interview of Wendol Jarvis. If there is anyone who can make you feel positive about film in Iowa, it is Wendol. After so much negativity about the film situation in Iowa, why not take a break from it and listen to this interview?:

Judyth Piazza chats with Wendol Jarvis, "Iowa Hometown Heroes"

Back Lot or Industry? - Iowa's Place in the Film Business

When supporters of an Iowa Film Incentive talk, it is usually along these lines: "We need film incentives so film producers (Hollywood) will come to Iowa, shoot their films, spend money, and support the Iowa Film Industry". They usually talk and think of Iowa as solely a location. They speak of economic impact in terms of purchases at local businesses. All this is well and good but it certainly does not create an industry, at least not a permanent one. This is because if the flow of films ebbs, those Iowans working in the business will have to either go elsewhere to seek opportunities or find another line of work.

Regarding Iowa as strictly a shooting location and placing ourselves entirely at the whims of the production slate of Hollywood studios is a very limiting way of thinking. To consider Iowa as being exclusively a location brings a few problems and limitations with it. Weather is one of them. Most productions are likely to be shooting during the warmer months of the year. This leaves film workers idle during the winter months.

When considering Iowa as a location most producers imagine only farms and small towns. This hardly makes Iowa unique as there are similar farms and similar small towns in other states and in Canada.

Even in thinking of Iowa as just a location, the thinking is limited because Iowa encompasses more than farms and small towns. There are many wooded areas that could stand in for other locations (think "Robin Hood"). There are areas with sheer rock faces (the bluffs along the Mississippi), and places with tall buildings (Des Moines and Cedar Rapids). Beyond that, most people forget that it is possible to build sets to represent other places. For example, for the film "Aaseamah's Journey" an Iraqi village was built. That's right, in Iowa! Just because this is Iowa doesn't mean that filmmaking with imagination can't happen.

About this "film industry" of ours: Although many call it such, presently it is made up of just a few small companies that produce local and regional television commercials and industrial films. This hardly qualifies us as a mecca for film production. Having feature film productions come in from Hollywood is unlikely to change this much. What is needed is our own indigenous film industry - one with projects that originate within our own borders. If any of these achieve success it may be enough to create the conditions to build permanent businesses and infrastructure.

The film business is not just camera crews on location. There are other facets of the business that function before, during, and after principal photography. Most of these functions are not dependent on locations (mountains, deserts, oceans) or weather and many could certainly be in Iowa.

Functions that take place before shooting and could be anywhere include, and are not limited to, screenwriting, storyboards, film completion bonds, insurance, and budgeting. Why couldn't some of these activities take place in Iowa? Being in close geographic proximity is not as much of an issue as it once was because of technological improvements with communication.

During principal photography, not everything needed is location dependent. During the days of the studio system, sound stages were heavily used and many films today still employ sound stages for part of their production. Because sound stages offer more precise control over shooting conditions and protection from weather, they would be an ideal addition to Iowa's film infrastructure. Besides augmenting the needs of visiting Hollywood productions, they could also make it possible to produce Iowa originated productions year round. If some stages were built with unique characteristics, such as an extra large studio tank, or special equipment for green screen or motion capture, it might be possible for Iowa to attract some movie business that doesn't involve farm and small town locations.

Sound stages also encourage television production. Television shows would be good for the Iowa film community because they typically employ film workers for longer periods of time than feature films and thus provide more stable employment. Television should not be ignored when we talk about a film industry.

A film doesn't end when the cameras stop rolling. There are many processes needed to finish a film and there is no reason they can't happen in Iowa. Films need to be edited, sound mixed, and color corrected. Films need to be scored and, if it is not released digitally, lab work must be done. Why can't at least some of this be available in Iowa?

Lastly a completed film must be marketed and distributed. Distribution is where the real power lies in the industry and it is the function that completes the production chain. Why not have some distribution companies in Iowa? The established companies may have most of the advantages but nothing ever stays the same. With imagination Iowa could have a piece of this business. With distribution in place we could say we truly have a film industry.

So what is Iowa's place in the film business? Back lot or industry?

What NOT to do with the Iowa Film Incentives

There's been a flurry of activity lately behind the scenes regarding bringing the Iowa Film Incentives back. With the scandals that caused the current program to be suspended there's a strong effort underway to get things right this time. This would be by replacing the current program with a new and improved one. The hope is to eliminate the omissions and remove loopholes that allowed the program to be abused. Many of the steps to take or not take are obvious. But there are a few things to avoid that look good at first glance but are likely to prove troublesome in practice.

Here are some things to avoid doing:

Shifting most of the film credits to higher budget ($25 million and up) productions.

On this surface this idea looks really good. The bigger the production, the more people hired, right? When you look closer to the wide range effects, some problems emerge. Because so much money is at stake on these higher dollar projects producers will tend to cover their bets by hiring already established industry professionals for the more important and high paying positions. For the most part these people will be those from the major production centers (Hollywood and New York, mostly). Because of their proximity to these locals these people are going to have much longer resumes and deeper experience than the average Iowan can hope to get right now. The result of this is that for most Iowans the most likely areas they will be hired for is for the low end and low paying jobs such as Production Assistant or Extra. This would hardly bring in the influx of income that a film program would be expected to bring in.

Smaller productions, although lower paying and requiring closer supervision, do offer a greater chance of advancement than the big films. This can translate into better jobs on the larger budget shows when these people get hired there. It also improves the quality of Iowa's film talent pool making the state a more attractive place to shoot a motion picture or television production.

Another potential benefit of supporting smaller productions is that some of these can be locally originated. If some of these become successes it is possible that some of these producers may want to put down roots, building infrastructure so they can continue to make films in Iowa. Why? Because we as a state supported them, hardly the situation they would find out in L.A.

Big films can be good and they can be exciting but let's not ignore the big producers of tomorrow.


Giving film incentives for using an Iowa-based pass-thru company

A producer can't find the people or equipment they need in Iowa. So they are allowed film credits if they use an Iowa-based pass-thru company to act as a go-between to procure what they need. Sounds like a way of getting things established, doesn't it? Since Iowa doesn't have a sufficient talent pool built up to staff these film jobs the state can still make itself attractive by offering a way around. And therein lies the problem.

Tell me if I'm wrong but isn't the idea of the film incentives to create film employment for Iowans, in addition to the purchase of goods and services - to build an industry, not just to simply bring films into Iowa?

Pass-thru companies are perceived by the public to be a financial shell game - a cheap accounting trick - because, if you look closely, that's exactly what they are - a way of laundering money paid out so that companies can still receive film credits that they would not otherwise receive. Because they are using an Iowa-based go-between to do their procuring of crew and equipment they are rewarded. Outside of the very few Iowans running these pass-thru companies, no Iowans benefit from these transactions.

Instead of training Iowans for important jobs, pass-thru companies allow producers to be still rewarded for not hiring our citizens. Instead of encouraging Iowa-based film support businesses to develop and grow, these pass-thru companies instead
benefit the established players in other states.


Keeping information about films that are set to shoot a secret

While it might be understandable to keep some information about a film production confidential - contracts, casting decisions, budget information (except perhaps that which which involves film credits) - it is not so understandable that the existence of a film and its contact information should be hidden from the Iowa public. Somehow this issue has never come up, but when the typical Iowan, the kind without personal industry connections, finds out about a production being shot, it is already too late. The crew positions are already filled and the film is already cast. The Iowa Film Incentive Program is supposed to give opportunities to all interested Iowans, not just a few select insiders, right?

If any of the above things are included in a new Film Incentive Program there is sure to be trouble ahead and we might not have a chance to recover again.

Positive News?

In the Des Moines Register article linked below, candidate for governor, Terry Branstad and others are open to revising the Iowa film credits. Chet Culver. the incumbent, of course is still committed to ending them.

"Branstad, others open to revise film credits"
http://www.desmoinesregister.com/article/20100913/NEWS10/9130317/1007/news05/Branstad-others-open-to-revised-film-credits

One idea mentioned in the article which is troubling if you think about it is to limit the credits to films with "Iowa-type stories" such as "The Bridges of Madison County". This, although it would make sense to legislators who still consider the Film Office to be part of tourism, would not make a lot of sense in regard to the practical realities of attracting film and television productions. In case the legislature hasn't checked, most stories are not set in Iowa and to limit it to this state would limit the films shot here. It would also chase away films that could be shot here because of locations that are similar to other areas of the country. It would set Iowa back even further than it was before the film credits when the only productions that would even consider shooting here were those that needed either a small town location or a farm. Considering the fact that the movie "Aaseamah's Journey" built an Iraqi village set on Iowa land, this idea of limiting film awarded credits to those Iowa-centric stories lacks imagination.

Hopefully the film credits will return, will be written well, and run correctly without any limited ideas hampering their effectiveness like this "Iowa stories only" idea.

Should Iowa Film Tax Program Get Second Chance?

Here is a news story on KCCI-TV's website about film incentives resuming for existing projects and the general situation. There is a text version of the story along with video for it:

http://www.kcci.com/news/24915843/detail.html

Culver comments in a clip included in the story, "We're not going to be taken for suckers, people unforgivably exploited that program." I ask, did any of the people who got jobs on the films that shot here and got paid for it feel like suckers? Did any of the hotels where film personnel stayed, or local businesses that sold to the films feel like suckers? Governor Culver was obviously sleeping on the job as any problems with the program developed and now that he's been shaken from his slumber he is "hrumpf!" outraged, simply outraged that anyone would dare take advantage of the holes that he and the legislature so nicely provided for them. Rather than admit mistakes and attempt to fix them he would rather freeze and then try to kill the program since it appears too taxing on his intellectual capabilities to find a way to fix the problems and make it work.

Iowa "Blacklisted"

Here's a link to a news story on the WOI-TV website where they have talked to Neil Wells:

http://www.woi-tv.com/Global/story.asp?S=13108181

He says that Hollywood has blacklisted Iowa. I doubt it is much of an exaggeration considering how everything has been handled by Governor Culver and other officials.

Film Credits Continue?

Here's a link to a WOI-TV news story about the Iowa Film Tax Credits supposedly continuing for projects already in the pipeline:

http://www.myabc5.com/global/category.asp?c=190187&clipId=5084156&topVideoCatNo=165457&autoStart=true

The big question is, has anyone actually seen any evidence that any production is going to happen? Other than volunteer type productions there hasn't been anything this summer.

Are We Doomed? Part 2

Gene just quoted an article from today's Des Moines Register that inferred that Terry Branstad would probably not be supporting film tax credits. Here is a link to the article so you can read it for yourself:

http://www.desmoinesregister.com/article/20100818/NEWS09/8180366/Branstad-would-cut-Iowa-Department-of-Economic-Development

Where does that leave us? Talk about us being between a rock and hard place! If the incumbent is re-elected and a new film bill comes up we know we can probably count on him getting out the old veto pen and Culverizing it. If Tweedledee is the choice, he'll probably be grasping at that same writing instrument. Some choice!

I'm planning to do a symbolic vote myself and do a write-in for Tom Wheeler. At least we know he is for film and it might send a message to both the winner and the loser of the election that we're here and we mean business.

"Get what you need and then get the hell out"

Just got word that a film production company is going to be shooting "pick-up" shots for the movie "Butter" soon at the Iowa State Fair. Pick-up shots, for those unfamiliar with the term, are quick location shots to insert into the rest of the footage. The rest of the footage for this movie is being shot in Louisiana because of the Iowa film credits evaporating after being Culverized. It was originally planned to shoot it in Iowa.

That now makes two films that logically should have been shot here but weren't: "Butter" which concerns the butter cow at the fair, and "Cedar Rapids" which, although its story location is Cedar Rapids, Iowa, was actually shot in Ann Arbor, Michigan with only "pick-up" shots (quick establishing shots) actually being shot in its namesake city.

The Big Question - Will They Return?

Here is a great Letter to the Editor from the creator of this blog that is in The Des Moines Register:

http://www.desmoinesregister.com/article/20100810/OPINION04/8100333/1038/Will-moviemakers-return-to-Iowa?

Fade to black? Cutting film tax break misses the big picture

The following editorial (link below) describes New Jersey's governor considering cutting their film tax credit in order to balance the budget. Too bad we didn't get any advanced warning and we didn't get the opportunity to oppose it. Our governor just decided to unilaterally blast it out of the water - Culverize it! - without asking anybody else whether it was a good idea, other that his yes men. Let's work to get a film incentive back in and to get him out.

http://blog.nj.com/njv_editorial_page/2010/06/fade_to_black_cutting_film_tax.html

New Mexico Still Going Strong But Threats Lurk

In this article you can see that even with a successful film program there are those who oppose it. If Iowa's can be resurrected and made to function well perhaps those who would threaten it could be fended off.

Read more: Richardson announces funds and warns about film industry’s future - New Mexico Business Weekly

Suggestions for a NEW Film Tax Credit Program

A little while back I posted a blog on here about "What is your wishlist" concerning the film tax credit program. I promised I would post what suggestions I was going to send to Senator Dotzler and his study group as they look at the film credits this summer and today is the day. What Senator Dotzler hopes to do is to introduce a new bill in the 2011 session that would replace the present flawed and suspended program. I'd assume it would keep only the elements that worked and I'd hope that it would not only fix what is wrong with the present program but would offer improvements. As I've said before, we aren't going to get a second chance, so let's get it right this time. I've spent a bit of time formulating my suggestions for this very reason.

This (along with copies of the original materials with notes written on them) is what I'm going to send to Senator Dotzler and his study group:

Dear Senator Dotzler and members of the Film Tax Credit study group,

As I understand it, you are working on a new Film Tax Credit bill which would supersede the present one if it is passed in the new legislative session in 2011. I do realize the importance of getting through the November election and getting past the trials that came about as a result of abuse of our present Film Tax Credit program. Timing is very important.

Ever since Governor Culver's freeze of the program in September of 2009, I've been following what has been going on and thinking about solutions. The following suggestions are what I've come up with after talking to others and considering the problems myself. Please understand in presenting these suggestions I'm only representing myself and not any of the various film organizations in the state or any national interests. These simply are my ideas of what I think might work and make this, once and for all, an effective program. (It might not be a bad idea to see what has worked in other states too.)

The following are my suggestions:

I think, to begin with, that we need to rethink what our ultimate objective should be with the film program. There has been so much made by detractors of the program of tax credits being a “race to the bottom” that we need to look at what this program really means. In its present form our program would certainly seem to fit this idea . It's been pointed out that Iowa having the best incentives is only temporary until another state tops us. The present objective has been to simply attract Hollywood productions to the state in order for them to spend money here and hire a few Iowans. In effect it's been to make our state an extension of their backlot.

I would suggest a new farther sighted objective. I think we should approach this as a means to build a permanent film industry inside our borders. I think we should expand the training beyond the lower level support jobs that were encouraged and look toward building a fuller infrastructure of film related businesses including those involved with post-productions and beyond. Our ultimate goal should be a self-sustaining film industry that can keep going long after outside productions have left and to make it possible to gradually phase out the tax credits so that this industry can contribute to the state's budget through taxes.

One thing that could be argued about the Iowa Film Office is that Tom Wheeler did a very good job at the job he was originally hired for – promoting Iowa as a place for productions to shoot and acting as a liaison once they were here. The trouble started when he was expected to do jobs that he was not qualified to do. He did not have a law degree so it was inadvisable that he be expected to be an expert in legal matters and he was not a motion picture accountant so it was not surprising that he was not the person to go over the books of television and motion picture productions using the Film Tax Credit program.

Politically it is unlikely that he could be hired back to run the Film Office but there are things that could be done to eliminate, or at least minimize, the possibility of the kinds of problems we experienced. I would suggest we separate the original duties of the Film Office from the responsibilities that were added with the tax credits. Additional staff should be hired to process the applications and to process the receipts to make sure that the expenses claimed are qualifying expenses. This staff should be under the oversight of a different department than the Iowa Film Office (the Department of Revenue would be the obvious choice). Furthermore there should be a built-in auditing component to this to double-check the work done. The people hired should know about the norms for the film industry as far as prices and what would be normal production expenses. There should be someone who knows about tax credits – especially film tax credits and any legal questions that aren't obvious should be referred to the Attorney General's Office. Putting the two parts of the film program under separate jurisdictions would prevent undue influence over the awarding of tax credits and keep the Film Office doing what it does best.

Before Governor Culver froze the Film Tax Credit program in September of 2009 a problem with the program was that most prospective Iowa film workers were not aware of productions needing cast and crew until it was too late. The titles and contact information of approved productions was kept confidential and most job seekers could only find out through word-of-mouth or news stories. I would like to suggest then that the titles of films that have applied and have been approved should be made public as soon as the information is available and that the Iowa Film Office website acts as a clearing house for this information. The information would include the title of the project and all of the relevant contacts so that the producers are not inundated with individual requests. I think that the Iowa Film Office should be the source of this information because it would be in the best position to be an honest broker. No film organizations, whether Iowa based or national, should be considered for the dispensing of this information because of the possibility of selectively withholding this information for the benefit of their own members. Likewise, a registry of Iowa film workers should be under the Film Office's control in order to be fair to all Iowans.

When qualifying for tax credits only the portions of a production's budget (specific line items) directly connected to film credits should be open to public scrutiny. The total budget of a film should be a matter for the producers. Instead of a minimum qualifying budget, Iowa should instead require a minimum expenditure of qualifying items. If this threshold is met, then the production would be eligible for tax credits as long as the receipts are in order and the items qualify. Items not qualifying would be excluded from the total. Under the present program having the whole budget subject to public scrutiny has been a bone of contention for producers. This is because it makes public items that have nothing to do with the tax credits and breaks confidentiality agreements with participants. Only expenditures that affect tax payer dollars should be open and transparent. The matter of how much of the budget to make public would affect how much the producers would avail themselves of the tax credits. They would have to balance that out for themselves.

The program should be structured so that films of most budget levels could qualify (low, medium, high). Care should be taken so that a large budget production could not suck up all the resources from other films and that all films have a chance, if requirements are met. At least half the budget should be raised before being considered and an adequate time to raise this money should be built into the program.

There should be a more orderly application process. Something should be done (I'm not sure yet what) to eliminate the bum's rush that the process had become. The idea of steps to complete was a good one but the process needs to be re-examined nonetheless. Make sure receipts are definitely turned in and withhold tax credits if they are not. The loose and easy way the program was run created the problems we have now.

All Film Productions should have to be bonded and have funds in reserve to meet payroll. The awarding of film tax credits would be contingent on meeting payroll obligations. There was at least one film that had qualified for tax credits that still hasn't paid the cast and crew that worked on it and instances of workers having to wait to get paid because of the producers waiting for tax credits. This is certainly not the way we want business conducted in Iowa.

No Credits should be awarded for "Above the Line" Expenses. Above the Line Expenses – that is, the principals of any given (director, producer, lead actors, etc.) are among the most expensive parts of a production and it should be the producers, not tax payers, who bear the risk of recovering the cost of these contracts.

No more "Pass-Through" Companies - The idea of Iowa-based companies being created to purchase or rent items out of state for the purpose of qualifying for tax credits rightly looked like a shell game to tax payers because that is precisely what it was. Get rid of the provision. It doesn't encourage film related businesses to locate here or originate here. It merely provides a dodge from buying and renting film related equipment and supplies from Iowa vendors. I don't know who made this suggestion in the formation of the bill but it was a bad idea from the start.

Credits should only be awarded for expenses incurred inside Iowa borders. Certain pre-production expenses would qualify such as location scouting if it met the requirements. Post-production expenses would qualify if the work was done by Iowa companies. Distribution and marketing expenses would not qualify unless we expand the film tax credits to include Iowa-based entities doing this work.

Only equipment purchased in Iowa and that remains in Iowa should qualify for credits. Anything that the production should already own would not qualify and all uses would have to be proven to be related to the production of the film. Rentals also would have to be done with Iowa based companies to qualify as well as purchase of supplies and expendables.

The percentage of tax credits awarded should reflect the percentage of Iowans employed. Workers would have to provide proof of residency in order to affect the amount of credits awarded. In addition to this, no tax credits should be awarded for any film until Iowa film workers and Iowa vendors have been paid. This would encourage a higher percentage of Iowans being employed on a project by producers.

I would like to suggest that there be no Iowa Income Tax exemption for film workers. Potential workers hardly need any incentive to get into the film business. The work is well paying and there is a perceived aura of glamour (although the actual work is different). The most crucial factor affecting whether Iowans leave their present jobs for employment in the movies is whether there is enough work to sustain a career. Exemptions on state income tax does not affect this at all and is not needed. In fact it holds back unnecessarily the benefits of films being shot in Iowa from the state treasury. I can't speak for others but I would expect that most would be willing to forgo the income tax exemption if it meant that the program could move forward and jobs could be created. Again, I have no idea who suggested this particular idea for the program but it is a flawed concept.

All approved productions should have locked in tax credit contracts. All contracts should have a maximum amount of qualifying expenses set with amounts over this totally the producer's responsibility. No amending. If the maximum set is not sufficient, producers should have to apply for a new contract from scratch with the application of such made public.

Motor vehicles used in productions would have to meet requirements in order to qualify for tax credits. This was very vague in the original film tax credit incentive bill. No purchased vehicle would be eligible unless it was an expendable item (destroyed as part of the making of the film) or it was for use in a permanent Iowa film business. A permanent Iowa film business would be one with a location either purchased within the state or with at least a five year lease in an Iowa location and being based in Iowa. Otherwise only leased and rented vehicles used specifically for the needs of the production would qualify.

No credits should be awarded for anything where money does not change hands. The whole idea of the program is to have productions add to the Iowa economy, isn't it?

No credits should ever be given for expenses incurred in selling the awarded tax credits. The tax credits are a benefit to the producers and it should be their expense, not the tax payers, to sell them to other companies.

No tax credits should be awarded until all relevant receipts have been turned in and reviewed. This might have already been inferred above but it bears repeating.

The program should be reviewed every year. It should be obvious by now that the program as it stands right now was not perfect. No matter how carefully a new program is designed it is unlikely that every kink will be worked out and every loophole closed if and when it is reinstated. It is also not clear if the staffing will match the needs for a given time period. For that reason I suggest reviewing the program each year and making adjustments as needed so that the debacle that just happened can never happen again.

Lastly I'd like to suggest that you give the Film Tax Credit program at Least 5 Years to work. Lots of people seemed very quick on the draw to scuttle the program and we have little idea how well it actually worked. I think it should be given at least 5 years to prove itself. Unlike how something like farm subsidies have been handled (which, by the way, has continued long past when they were needed), I think the tax incentives should be designed with the idea in mind that eventually they should be reduced and then eliminated.

The film tax incentive program should be thought of as a form of scaffolding for this bridge to potential prosperity that is this infant Iowa film industry. Right now it needs the support in order to be built and to gain strength but eventually it should be expected to stand on its own. It should remain standing and be self-supporting even if productions from outside the state cease to shoot here.

-David Thrasher

My Story - The Quick Version

I've wanted to make my living in motion pictures since the time I was in junior high school. When the film tax credits came along it appeared that I had a chance of doing that and doing it right here in Iowa. I cautiously felt my way into it and ended up with a peripheral job on the movie "Splatter" shooting documentary footage of the location shoots. I was ready to investigate other opportunities, perhaps even have something more directly to do with the quality and success of a movie when our Governor, the "great" Chester Culver, the "Big Lug" himself, Culverized the film business in Iowa by imposing a freeze on the film tax credit program. Since then this state has turned into a ghost town as far as feature film production is concerned and because of how this was handled it is going to be a long time before producers consider coming back here. I've never wanted to make my living working the typical "straight jobs" that Iowa offers so I've been trying to come up with my own income producing opportunity that does not depend on an employer. Film is still a ways off for me.