On the eve of the AFCI Locations Show in Santa Monica (June 27-29), John Hazelton looks at new production hotspots such as Georgia, North Carolina and Puerto Rico

A few years ago, US states seemed locked into an incentive arms race that was pushing tax breaks for film production as high as 40% and above. It was great for producers, but it couldn’t last - before long the most generous state programmes either ran out of money or had their annual budgets slashed by anxious politicians.

These days, incentives are still a vital part of any state’s effort to attract film, television and commercial production and the local spending it generates. But incentive programmes are now about more than just a big percentage; and the relative importance of a state’s other attractions, such as crew base, production infrastructure and locations, has increased.

The changing competitive climate has led to the emergence of new production hotspots and new contenders for the available production activity. The hotspots are in turn providing fresh opportunities for US and international companies that can provide much-needed services and facilities to incoming productions.

The south-eastern state of Georgia is one of the busiest of the new production centres. In fiscal 2012, projects including Flight, The Hunger Games: Catching Fire and TV series The Walking Dead produced a total of $3.1bn of economic activity in the state, 29% up on the previous year.

Georgia’s incentive programme offers a 20% transferable tax credit, plus another 10% if a production helps to promote the state, with no caps on total spend or above-the-line talent costs.

Georgia Film, Music & Digital Entertainment Office director Lee Thomas also notes the programme is, “built for longevity. We wanted to have a credit rather than a rebate because we wanted the programme to last. A lot of rebate states run out of money, or legislators say, “Why are we giving money to these people?’”

In addition to its incentive, Georgia has a crew base that is now large enough to handle 10 productions at a time, and state capital Atlanta offers one of the biggest transportation hubs in North America.

“We like Georgia better than some of the other incentive states because it has a very deep crew base,” says John Thompson, head of production at Millennium Films, which recently completed its first full shoot in the state, for thriller Killing Season. “The department heads and crew members are vastly experienced,” he reports.

The surge in Georgia production - this year the state is hosting projects including Fast & Furious 7 and Million Dollar Arm - has boosted demand for studio space and in the last few years almost a dozen companies have announced plans to build new studios or expand existing facilities in the state.

Most recently, the UK’s Pinewood Shepperton said it will build its first US studio just south of Atlanta, in a joint venture with local trust River’s Rock.

Georgia film office’s Thomas believes the stability of the state’s incentive has been crucial in attracting infrastructure investments that will pay off only if production levels remain high.

Pinewood, she says, “feel like the incentive is stable, they see a lot of business coming here and it’s easy to go from here to London and back. Everything fitted for them.”

From the state’s point of view, the new studios promise to make Georgia more attractive to big budget and international productions, thanks to Pinewood’s global reputation. “This will give us more opportunity to get those large-scale projects,” Thomas says.

The value of really big feature productions was made evident last year in North Carolina, which hosted the first Hunger Games film and has become another US production hotspot.

Though the number of projects shooting in North Carolina dipped slightly from 2011 to 2012, direct spending by productions in the state jumped from $228m to $376m.

The cause was Iron Man 3, which, according to figures released by the Motion Picture Association of America, received $20m in incentives and was responsible for in-state spending of $179.8m.

Two years ago North Carolina changed its incentive - a 25% refundable tax credit with no annual cap but limits on qualifying labour costs - not to make it bigger, but to make it smarter.

“People tend to think that if you raise percentages you’ll get more productions,” explains North Carolina Film Office head Aaron Syrett. “We took a different spin. We looked at the behaviour-changing aspects, like removing caps or allowing things to qualify that didn’t before.”

Beyond incentives

Like Georgia, North Carolina is also favoured by producers because it has a strong crew base, an asset that has recently helped to attract projects such as We’re The Millers, Stuck In Love, The Conjuring, Matthew Weiner’s You Are Here and TV’s Homeland to the state.

“There are states where the incentive is similar or even more,” says We’re The Millers executive producer Marcus Viscidi, “but at times you can’t source out all the local crew so you end up bringing people from LA or New York. That offsets the benefit of the incentive.”

The area’s trump card, however, may be its infrastructure, which includes the EUE/Screen Gems studio in Wilmington with its 10 sound stages and two special-effects water tanks.

The infrastructure certainly sealed the deal for Iron Man 3, Syrett suggests.

“A film like that is so big they don’t have to get the richest incentive,” he says.

“What they need mostly is infrastructure. They did all their studio work here. At one time they had all 10 stages [at EUE/Screen Gems] going.”

Looking ahead, more big films might encourage more infrastructure investment.

“We are always looking to grow the industry and the post-production and visual-effects space is one area,” Syrett adds. “That is a gap we’d like to fill.”

Lack of infrastructure is often a problem for regions still building up a local film industry and striving to compete with established production centres.

Puerto Rico, a commonwealth of the US in the north-eastern Caribbean, has been competing for production business for the past decade-and-a-half and has landed projects including The Rum Diary, The Men Who Stare At Goats, Fast Five, Runner, Runner and, most recently, Favela starring Michael Jai White.

Its incentive programme - which offers a 40% transferable credit on payments to local residents and companies and a 20% credit on payments to non-residents - is generous and, by many accounts, well run, and its locations are varied.

“We have beaches, forests, mountains, as well as modern urban locations,” says film commissioner Demetrio Fernandez Manzano. “We have doubled for Mexico, for Miami, for New York. The diversity of looks we offer is great.”

The territory’s crew base can handle two or three big productions at a time and because Puerto Rico is a “right to work’ jurisdiction those crews can be union or non-union.

Currently lacking, however, is state-of-the-art studio space. The territory does have large government buildings that can double as sound stages and are available free of charge, but it does not have any purpose-built sound stages.

Fernandez Manzano reports that two local business groups are currently finalising the finance for new studio facilities.

And, he says, “We have been negotiating with two other North American groups. I believe by at least the second half of 2014 we will have one of those sound stages built and running.”

If one of the studio deals goes through and Puerto Rico builds a permanent sound stage, the Caribbean archipelago could become the latest hotspot on the ever-changing global production map.