As president of the Entertainment Industry Development Corp., Steve MacDonald has had several months to re-establish an agency that had been beset by scandal. MacDonald came to the EIDC, which handles film permits for the city and county, from 15 years in Los Angeles city government, primarily in business development. The EIDC, formed in 1995, has been shaken by an embezzlement scandal that led to the convictions of former President Cody Cluff and former General Manager Daryl Seiff.
Cluff, who was sentenced to three years probation, had been accused of spending public money on excursions to strip clubs and a baseball camp. He served three months behind bars while being evaluated by state prison officials. He also repaid $80,000 to the EDIC as part of a plea deal. With a new board consisting of industry executives, members of homeowners associations and neighborhood councils, MacDonald wants to regain the group's credibility and, perhaps, renegotiate its contract with the city.
Question: How have you signaled to the industry that the organization has been overhauled since the Cluff scandal?
Answer: Through our board, which has a bunch of industry executives. I've spoken on panels on stopping runaway production, we're having ad hoc meetings with location managers to find out what we can do to improve the process and make location filming here more attractive. I have also been going to studios and meeting with executives, talking about location filming. But I still need to do much more to let them know who I am and what I'm about.
Q: And what is that?
A: I'm trying to look at EIDC as a business. I don't think it has been seen as a business by some people who worked here and definitely not by the government, the public and even the entertainment industry. A lot of people still regard the EIDC as a government entity or an arm of the city. We're a wholly private, non-profit entity, and have been since we were created in 1995. And our only connection with the city and other jurisdictions is through our contractual relationship.
Q: How was the Cluff situation allowed to develop?
A: If you have proper oversight, then that doesn't occur. Before, there weren't frequent meetings of the board, and some people claimed they didn't even know they were on the board. Now our board has met for the last year every month with assigned committees, and an executive committee that's even more engaged than the rest on everyday issues. They brought in a professional chief financial officer. I can't get inside the head of the people as to why they did what they did, but there weren't the proper controls in place. Now it's completely different.
Q: What kinds of checks and balances do you have now?
A: We have an entirely new accounting system that is up to date, and follows prescribed accounting principles. We have governance rules that are clear about how our board meetings take place.
Q: EIDC had to keep obtaining permits throughout the scandal. How has that gone?
A: That part of the EIDC, that main mission, has worked well throughout. The industry has been absolutely supportive of the EIDC in doing its work, because even through the terrible times, they still always realized that having an EIDC is more helpful than the previous situation of going to a city or county or both themselves.
Q: You have had experience working at the Department of Building and Safety. What's the difference between that and being involved with the entertainment industry?
A: When entertainment industry people want their permits, they know they can go somewhere else, so they're appropriately demanding. They're very much about, "Do it now," and they want to get their projects done immediately, they're under tremendous pressure to meet schedules.
Q: Is that different than your experience at Building and Safety?
A: At Building and Safety, we tried to make a really stodgy permit process faster. We set up an e-permit system, where people could get simple permits done online and we paid for it with a surcharge (to the city). Here, we're in a little different situation. We would absolutely want to improve our permit system by building online systems, but we would have to raise fees to the industry to pay for it. We have an online permit application system being tested now.
Q: You don't have any entertainment industry experience; how did you end up at the EIDC?
A: The new board did a major search through an executive search firm; they went through about 170 candidates. I knew they were looking for someone because I was following what was going on in the papers. I was really interested in the position. It seemed like such a good fit, because of my economic development work and my permit work.
Q: Where does EIDC's money come from?
A: We get 100 percent of our revenue from the entertainment industry. We charge a fee of $450 for permits for features, TV and commercial production. And that fee is good for up to 10 locations. There are additional issues that cost money, like if they change things at the last minute. But the bottom line is that the bulk of our revenue comes from fees we charge the industry.
Q: What are the challenges of being a go-between for the entertainment industry and the government?
A: There's a number of unfunded mandates we have in our existing contract with the city, and to a lesser degree with the county, that are difficult to meet without a revenue stream. And we don't want to raise our fees to the industry. We're actually doing well here from a location filming standpoint as far as the number of production days. We're going to have a record year. So we have to be careful that we don't shoo away some of the production.
Q: What about complaints related to location filming?
A: Our complaint ratio is extremely low. We get three complaints per 100 film locations. That's not to negate the fact that filming is an inconvenience.
Q: What about downtown?
A: There's a lot more filming downtown. You have in the arts district and the historic core downtown an area where you had mostly vacant buildings from the ground floor up. You maybe had a retail location or something, but now you have people who are spending $3,000 or $4,000 or $5,000 a month for high-end lofts. That very fact means there's going to be more complaints. There are some special conditions that are being worked out with the industry. We were involved with those initially and the city now has to approve them.
Q: What services does EIDC provide the city that it is not compensated for?
A: We have at least $200,000 worth of accounting costs we incur yearly in order to collect, reconcile, refund and do all the things with the money that we collect for the city alone. We have no way under our contract to be compensated for that. We get no revenue, not one penny from anybody else other than the fees we charge the people that we serve.
Q: Why perform those services if you don't get paid?
A: We're required to do some of this under our contract. And for the future of location filming in the city, you have to have this type of effort.
Q: What's the strangest request for a filming location you've had?
A: We had two F-18 fighter jets fly down the L.A. River. Our permit coordinators did a lot of work on that. That was for Fox's "24." That required lots and lots of notification, for the noise and so people didn't get scared. The Police Department had to know. We had to make sure there were no nearby productions that would be disrupted by the noise. We didn't get any complaints at all.
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