Will L.A. Businesses Star in Show Biz Revival?

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When a director yells “Cut!” the cast and crew head off to the local watering hole. They flash a card and get a 10 percent discount on their drinks because they’re in show biz.

Production workers can do this in San Francisco and New York. So a Los Angeles city councilman would like to see it happen here.

As part of the city’s latest attempt to bolster the local film industry, Councilman Richard Alarcon has proposed setting up a vendor discount program. Production cast and crew members would receive cards entitling them to discounts of at least 10 percent at participating restaurants and hotels, dry cleaners, catering services, costume shops and prop houses.

Under the program, businesses would not be reimbursed by the city. But their names would appear on a list of preferred vendors, so they could end up getting more customers from production crews.

But will enough businesses be willing to offer these discounts to make the program successful? And would the prospect of cheaper props, costumes, catering, and scores of other goods and services really be enough to keep more film productions from leaving town?

Dmitri Tokar is a backer of the discounts and he believes it’s worth a try.

Tokar, who owns La Cienega Studio Cleaners Inc. in Los Angeles, has cleaned garments worn on production sets for more than 30 years. With most of his business coming from the entertainment industry, he has long given reduced prices to studios and production houses. Meanwhile, he has watched as productions have left town and taken their garment-cleaning business with them.

“We give production companies discounts and some take shows out of town anyway,” Tokar said. “But this program might encourage more productions to stay in town and bring more customers to my door.”

Tokar and other backers of the discount program say the key is that it would guarantee discounts up front and production companies wouldn’t have to negotiate prices with vendors on a case-by-case basis. Since there would be a database of participating vendors, cast and crew members of a production could look up the nearest participating dry cleaner, costume shop or caterer.

While details have yet to be worked out, Alarcon intends that crew members will be able to use the cards for purchases related to their productions and their personal use.

The City Council last week directed administrators to come up with a workable way to make Alarcon’s proposal a reality. Among the issues to be resolved is whether Film L.A., which issues film permits, and notifies neighboring residents and businesses of film shoots, would also run this program.

Alarcon wants the discount card program up and running within a year. He said it would give production executives more certainty about the discounts, making it easier for them to budget and keep their shows in town.

“It creates a standard that would allow people to know where they can go to get discounts,” he said. “With production executives so conscious these days of their budgets, every little bit helps.”

At least one producer-director agrees. Chris Weitz, of “American Pie” fame, recently wrapped up filming “A Better Life,” about immigrant workers and largely shot in East Los Angeles. He said that having a centralized vendor database to turn to would be valuable.

“If you’re a line producer, knowing that you can get discounts of 10 to 15 percent off of the list price is very useful,” Weitz said. “Productions have to keep strict budgets and it’s difficult to negotiate with individual vendors knowing that any time you fail to reach an agreement, you can go over your budget.”

Not everyone is convinced the program will work, though.

“The only way that a discount program would work for a company like mine is if you make up for it in volume,” said Gregg Bilson Jr., chief financial officer of Independent Studio Services, a Sun Valley company that rents out props to production companies.

Bilson isn’t convinced that such a discount program would make much difference when set against huge tax incentives granted by other states.

“On a $100 million film, if a state like Georgia is willing to give a 30 percent discount on the total film, a 10 percent discount on a cappuccino or local dry-cleaning service just doesn’t compare,” he said.

Bilson’s company already offers discounts to its film industry customers. Nevertheless, he would be willing to give the program a try, but he wouldn’t cut prices any deeper.

Tax breaks

Alarcon acknowledged this program would play only a small part in the battle to keep film production from leaving the region.

Still, from the cash-strapped city’s perspective, the program would be a very low-cost way to extend a hand to the entertainment industry.

In recent years, the city has taken acts that cost it more revenue. It has allowed filmmakers to use its facilities for free, slashed business taxes for productions of less than $5 million, and exempted writers and other creative artists from paying business taxes on their first $300,000 of income.

In 2009, in response to generous tax incentives offered by other states, California enacted tax credits of up to 20 percent for feature film productions with budgets under $75 million, and up to 25 percent for television shows and independent films with budgets of up to $10 million. These tax credits have kept some productions from leaving the state.

But in order to qualify for these tax credits, production costs have to stay within the limits.

“That’s where a vendor discount program comes in very handy,” Weitz said.

Alarcon said he introduced program after hearing about similar programs in other cities, such as San Francisco and New York.

“If those cities can do it, we should certainly be looking at it,” he said.

New York introduced a film vendor discount program in 2006. Since then, 970 vendors have joined the city-run database. The Mayor’s Office of Film, Theatre & Broadcasting has issued roughly 30,000 discount cards to production companies.

Julianne Cho, a spokeswoman for the film office who helped set up the program, said participating vendors have to document that they will discount products and services at least 10 percent from list or market price. The discount cards are issued for every production that seeks a permit with the city; they must be renewed every 90 days or they expire.

“It’s not only more attractive to shoot productions here with this program, it also boosts business for vendors who would otherwise find it difficult to connect with the film industry,” Cho said.

She said the city has asked several of the participating vendors whether they had seen an increase in business due to the discount cards. Most said yes, with dining chain Applebee’s reporting one of the strongest increases.

Cho said there were some initial setup costs, including designing the cards and creating the vendor database. But the administrative cost of the program now is minimal, with several film office staffers devoting part of their time to it.

San Francisco launched its version of a vendor discount program three months ago. Like the New York program, vendors must document discounts of at least 10 percent from the list price of their products and services.

About 50 vendors have signed on, including several local hotels, according to Susannah Greason Robbins, executive director of the San Francisco Film Commission, which administers the program. She said every feature film production has asked for vendor discount cards, as have most TV series and commercial shoots.

Robbins said it was too early to tell whether the discount program was boosting business for vendors. That’s the real issue in Los Angeles as city workers and the film industry try to design a program.

“From a PR point of view, this is a great thing to have. It becomes like any other affinity card,” said Paul Audley, president of Film L.A. “But the jury is still out on whether this generates additional traffic for the participating vendors. That’s the key thing.”

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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