Incentive program intended to lure productions to Duluth
Economic development authority aims to launch program with $200,000.
Duluth soon should be a more attractive place to shoot a film or video production. The Duluth Economic Development Authority passed a resolution of intent Wednesday night to set aside $200,000 to establish the Duluth Production Incentive Program.
The exact details of how the program will work have yet to be formalized, as city staff want more time to collaborate with St. Louis County to make sure their efforts dovetail with one another, explained Chris Fleege, director of Duluth's planning and economic development department. The county has dedicated $1 million to its effort to bring more film and video production to the Northland.
When the idea of of an incentive first was floated by DEDA in October, staff proposed a $100,000 budget for the initiative, but Eleanor Bacso, an economic developer for the city of Duluth, said, "Through additional conversations, it was pretty apparent that this number needed to increase to really have that larger impact that we were looking for."
A draft version of Duluth's proposed incentive program calls for makers of qualifying television, film or digital productions to be reimbursed for up to 25% of what they spend in Duluth on local goods and services, up to a maximum of $25,000 per project.
But the local incentive would be stacked on top of a county program that reimburses for another 25% and a recently adopted state program that also can cover 25% of expenses to potentially provide a net yield savings of up to 75%.
The government incentives are simply a cost of doing business in the high-stakes world of the production industry these days, according to Shari Marshik, executive director of the Upper Midwest Film Office.
"Without incentives, we can't even sit at the table," she said, pointing out that about 35 states now offer incentives as they compete for production dollars.
"People may think about Hollywood and huge production budgets. But in the real world, production budgets are tight. And if somebody can save 25 or 45 or even 70% on expenses in a certain location, that's important. And if they can't, then there's no reason for them to come to a location, because they can find those savings elsewhere," Marshik explained.
Some states that were early to offer incentives are now reaping large financial benefits, said Marshik, pointing to Georgia, where annual production spending now amounts to about $4 billion.
Bacso noted that production crews obviously can pump money into the local economy through the accommodations and the food they require during a shoot. But she said the benefits could extend well beyond existing businesses.
"This is truly a rare opportunity to grow this already-thriving industry right here in Duluth. There can be a number of new businesses that can be born out of increased production here, such as prop and costume rental, specific businesses that do, say, hair and makeup, and there's quite a bit of editing that's needed for post-production. Truly, the list could go on, because there's a lot of opportunity here," Bacso said.
Marshik said the Northland already is home to a number of people with valuable production skills, but she acknowledged one of the biggest challenges to accommodating industry growth will be to recruit and train additional talent.
At large Duluth City Councilor Arik Forsman began advocating for a production incentive program earlier this summer and said, "I think this could help Duluth stay on the map as a production destination and as a market that people will want to take a look at."
Marshik noted that other parts of the county have already upped their game and pointed to the Iron Range Regional Production Incentive Program, offering a 20% reimbursement, as an example.
DEDA Commissioner and 3rd District City Councilor Roz Randorf admitted she was skeptical of the initiative initially.
"At first I was like: Really? We're going to get movies shot here?" she said. But as Randorf dug into the industry and saw the incentives other communities were offering, her thinking changed.
"It was like this circle of incentives all around us and nothing in Duluth," she said.
Forsman considers $200,000 a modest investment in a new initiative that could grow. But he also likes the cautious entry, saying, "It makes sense to take this thing for a test drive first."
Randorf says she likes the fact that Duluth's proposed incentive program is not based on wishful thinking or speculation.
"We don't pay them ahead of time. They have to turn in their receipts for review, and then they would qualify for incentives. So, it's after the fact and a true rebate, in that sense.," Randorf said.
"We just really have to do this if we want to be competitive," she said.