CHARLOTTE, N.C. -- Two film companies say the city of Charlotte’s idea to redevelop Eastland Mall into movie studios can only happen with public money and continued support from a state tax credit program for the entertainment industry.
The city bought the remains of Eastland in June for $13.2 million, and hopes to partner with a developer to convert part of the mall’s 81 acres into sound stages or movie studios.
Two companies considering the project recently told the city that Eastland is promising, but that without the state’s 25 percent tax credit for movie and TV production, business would likely flee to other states.
“We believe the city can certainly support film facilities – in fact a ‘next generation’ production campus – if state tax incentives remain stable,” said a proposal by the Film Studio Group, a Los Angeles-based team that responded to a recent city inquiry about remaking Eastland.
Film Studio Group added that while Eastland isn’t “optimal” for a film studio, part of the building could be converted into offices, wardrobe and makeup rooms, screening rooms and a studio store.
The group said “significant government support will be required to develop a studio.”
The city’s economic development office plans to release a formal Request for Proposal for Eastland in early 2013. This fall it asked for information about the project, and Film Studio Group was one of two studios that responded in November.
The other group was Charlotte-based ReelWorks Studios, based in Fourth Ward.
Eastland Mall was once the commercial hub for east Charlotte, but the mall went into a slow decline in the 1990s before closing in 2010.
Eastside residents are hoping the city can remake the mall into an office, residential and commercial center.
N.C. generous with subsidies
North Carolina has an aggressive incentive program for movie, television and commercials, which has helped land such high-profile projects as the Showtime series “Homeland,” which is filmed locally.
For instance, if a company spends $75 million on a production, it could be reimbursed up to 25 percent – nearly $19 million – for “qualifying expenses.” The refund is subject to an annual audit.
The subsidies are among the most generous given to any North Carolina industry.
The General Assembly agreed recently to extend the tax credits for a year, through January 2015, but Republicans have said the incentives possibly will be reduced as part of an overall tax overhaul in 2013-2014.
Part of the city of Charlotte’s legislative agenda for the upcoming year is to extend the credits. And the N.C. Film Council has lobbied legislators to keep them.
Republican Gov.-elect Pat McCrory, the former Charlotte mayor, isn’t committing to an opinion on the film credit debate.
Chris Walker, a spokesman for McCrory, said the governor-elect “believes the film industry is a great chance to show off North Carolina’s resources and beauty while creating much needed jobs.”
Walker said “the best way” to grow the film industry is to “reduce regulations and reform our state’s out-of-date tax code that was written in the 1930s to reward existing business and attract new ones.” He said he will look at the incentives “while crafting a long-term tax reform solution.”
A New York Times article recently highlighted the fickle nature of film incentives. Michigan had among the most generous subsidies for the film industry, with credits approaching 50 percent.
But in 2010, a new Republican governor, Rick Snyder, reduced incentives in favor of a broad-based lowering of taxes, according to the article.
Much of the business Michigan landed moved to other states, including North Carolina.
“The films go where the money is, primarily,” said Christopher Cates of ReelWorks Studios in Charlotte. “Secondarily, they go where locations are applicable.”
Cates said he is interested in developing Eastland. But in his response to the city, Cates said a Charlotte studio’s success is “completely dependent on the continuation of film tax incentives.”
Government support needed
Three movie companies or executives have raised their hand informally about partnering with the city on Eastland.
Jamie Banks, a spokeswoman for the city, said other studios had contacted the economic development office. But she said some were concerned about giving too much information because it would be a public record and compromise a future bid.
• ReelWorks Studios – which said it’s the city’s largest independent film studio – responded to the city’s Request for Information this fall. ReelWorks, located uptown near the N.C. Music Factory, estimated a studio would cost between $30 million and $50 million.
Cates, the ReelWorks executive, said the city’s plan to have studios be a hub for other development could be difficult. The studios would need security and could resemble a gated community, he said.
“It’s not going to be an intimate part of the rest of the development,” Cates said.
That could be a sticking point with some Eastside residents who are watching the city’s efforts.
The Eastland Area Strategies Team recently sent the city a letter outlining its goals for the site, which include creating connectivity and walkability for neighborhoods, unifying communities and taking advantage of natural features.
Some speculated that part of the mall could be reused. Cates said he thinks that’s doubtful.
The city isn’t wedded to keeping all or part of the mall. City officials have said demolishing the entire building could cost as much as $10 million, and they have indicated they could be willing to pay all or part of that cost in a partnership.
Cates said he helped bring the Showtime series “Homeland” to Charlotte and also negotiated a contract to bring another series pilot, “Shelter,” to the city.
He said he worked in Hollywood for 15 years before moving to Charlotte.
He said he would be interested in developing Eastland if the city’s plan “has the right parts and pieces.”
“There will have to be some participation from the city, county and state to make it work,” Cates said. “It’s just too risky otherwise.”
• In early November, The Film Studio Group told the city it is “extremely enthused” about building a “full-service studio complex” in Charlotte.
Its proposal envisions using about 20 acres of the site for the studios. The studio project would be a loss-leader, but it could help develop a campus that could attract industry-related businesses.
The group said it has worked on more than 30 other studio projects, including in Hawaii, Mexico, Canada and Europe.
The group is composed of industry executives from California, along with a local real estate developer, Frank Martin, of New Carolina Income Properties.
“I think they are serious,” Martin said. “I think they recognize that in every situation, this requires a good deal of government support. This is an industry that benefits the broader community.”
• In September, Charlotte movie executive Bert Hesse told eastside residents he envisions he and investors would spend $150 million on a film studio, offices and possibly a hotel.
Hesse, the president of Los Angeles-based Central Avenue Pictures, said he would target small, independent films for his studios. He said they are less dependent on the state’s tax credits.
Hesse didn’t respond to the city’s Request for Information. But he could still put in a formal proposal in 2013.