Friday, January 25, 2013

Tax Credit Programs Point to Ideal Pairing of Film and Preservation

In case you may have missed it, Governor Cuomo issued a press release Tuesday outlining his 2013-2014 Executive Budget. Though much of the release concerned reform, mandates, and spending, two highlighted programs caught the eye of a few of us here at Preservation Studios.

The first was the New York Film Production Tax Credit, which has been extended through 2019 with up to $420 million available per year for film production in the state. The second was the Historic Commercial Properties Rehabilitation Credit, which extends the existing tax credit, up to $5 million per project, through 2019, making the credit refundable after 2015.

Pierce-Arrow Admin Building, future home of
the Pierce-Arrow Film Arts Center
Photo Courtesy of WNY Heritage Press
At first glance, the two would not seem related, but in a city like Buffalo, where there is a surplus of commercial space and a thriving art culture, the extension and enhancement of these programs could be very successful. 

Part of this is tied to the requirements of the Film Production Credit. In order to qualify, a film crew has to utilize a facility regularly used for production and that features a 7,000 square foot soundstage, though only one day of filming needs to occur there, and the filming can be completed in any part of the facility, not just the large soundstage. If a qualified film production facility is used, then the film company is eligible for up to a 30% tax credit on their project. 

Though Buffalo only has four facilities that meet the criteria at present, the city is blessed with an abundance of buildings that could be easily converted into production spaces making them eligible for the tax credit. Buildings like 500 Seneca, which features 180,000 square feet of available space could easily convert 7,000 into a soundstage, and just as likely are the plethora of warehouses along Niagara Street and in the East Side. 

This is where the New York Historic Commercial Properties Rehabilitation Credit comes in. Converting large warehouses and factories is obviously a costly endeavor (the 500 Seneca rehab is estimated to cost $35 million), and tax credit programs like this allow developers not only to offset the cost of the rehab, but actually enables them to leverage more assets against the bank to help secure a better loan package. 

The result? A developer looking to convert a warehouse in Buffalo could apply for the rehab credit, as well as the Federal Rehabilitation Tax Credit program (if it is eligible), then begin catering to film studios looking to feature Buffalo's historic architecture and benefit from the State's film production credit. 

Some groups are already poised to take advantage of the program. The Pierce-Arrow Film Arts Center, establishing themselves in the former car-manufacturing company's Admin building at 1685 Elmwood, features one of the four qualified facilities in the Buffalo-Niagara area. The group is hoping to bring together a collaboration of several film groups in Buffalo, creating a common space where students and professionals could work together on projects. The hope is not only to draw production companies to the city by providing a facility already staffed with qualified workers, but to ensure that film professionals stay in the city as well.

With the extension of the Film Production Credit, hopefully the Film Arts Center can draw several production companies to Buffalo. The Film Production tax credit program has been incredibly successful for New York State, resulting not only in $6.9 billion of spending in the State, but accounting for $748 million in taxes (compared to the $335 million that was credited) as well. If Buffalo can continue to preserve its beautiful historic fabric, as well as convert some of its forgotten buildings to new uses, perhaps it can tap into this already burgeoning market in New York State.

Written by Derek King, an Architectural Historian at Preservation Studios. 

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