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Posted: Sun., Sep. 5, 2004, 6:00am PT
Fewer bucks for Canucks
Runaway shoots north of border feeling 'location fringe'

Though most Americans film workers publicly bemoan runaway production, in private some of them acknowledge that foreign lensing offers benefits like tax breaks, new sources of funding -- and the opportunity to pad your budget, far away from the watchful eye of studio bean-counters.

But there's been a subtle shift in lensing locales, with Canada -- which has long been synonymous with the phrase "runaway production" -- facing a production drop of 20%-25% this year.

That prediction comes from Mark Prior, president of Toronto-based Entertainment Partners Canada, who says, "Canada's become the victim of its own success because there are now so many more players after the same pie."

Key factors sucking the air out of the Canadian balloon:

  * Hollywood is spending more money on fewer films, which translates to more competition by locations for prime projects. That means producers get impressive incentive offers from everywhere in the world, from Prague to Pretoria.

  * Stars, directors, execs and producers are asserting their preference to shoot in Los Angeles or New York if possible.

  * Frustration with spotty crew quality in Canada, especially outside Toronto and Vancouver.

  * Location fatigue stemming from repeated use of the same locations and repeated stays at the same hotels. "I'll kill myself before I have to stay at the Sutton again," one director asserts, referring to the go-to Vancouver hotel.

  * Last year's SARS epidemic, which turned significant numbers of projects away.

  * The disappearance of Canadian tax shelters for films, which were popular for major studio productions between 1998 and 2002 and could trim as much as 9% off the budget. "I can't say what the impact of taking away the shelters was, but if the government were to reinstitute the shelters on terms equal to a few years ago, there'd be a line of people tomorrow wanting to apply," Prior says.

Many U.S. producers have little interest in going to Canada. Fox Searchlight chief Peter Rice can't recall a single instance of his studio shooting there in the 71 movies it's produced -- though it has gone to Dublin ("In America"), France ("Quills," "Le Divorce"), Australia ("Garage Days") and Spain ("Sexy Beast").

"We tend to do it wherever the location is most appropriate," Rice asserts. "For us, the difference on a $10 million movie might be $1 million in incentives, but a large part of that's going to get used for your travel and living expenses while you're shooting."

Rice's preference is simple: shooting in L.A. and New York. "You have great depth among the actors and crew," he notes. "You really do get the best."

However, some see this glass as half-empty: Though Canada may be losing its primacy, there are still other states that are luring production, with state incentives from New Mexico, Louisiana, Hawaii, South Carolina, New Jersey, Pennsylvania, Illinois and New York.

Producers of Paramount/Sony's "The Longest Yard" cite New Mexico's givebacks as the key factor in selecting Santa Fe over Canada for the prison scenes.

Producers have clear incentives to travel. Some like the fact that, away from home and distractions, the cast and crew can concentrate on their work.

Others like the opportunity to perform a budgetary song-and-dance. "If I'm producing a TV movie, let's say I overestimate a $6 million project by $500,000; that probably means I can get a higher license fee from the network, and if I can bring the project in under budget -- cutting stunts, additional sets or the number of locations -- then it's money in my pocket," says one producer.

So how should Hollywood keep production home or at least within the United States? Insiders believe there are two key steps. First is to convince the top creatives that they can make a difference in the decision of where to film. "Directors and actors can say 'If you want me, I'm not leaving the country,' " another producer says. "That doesn't tend to happen a lot -- only with experienced directors with clout when the studios decide not to go with a first-timer."

The second step is to expand the pie. "The way to keep film activity here is find ways to encourage independent financing of films so more movies get made rather than battling over a shrinking number of studio films," one producer suggests.

Though the Canucks pioneered and perfected the use of government incentives to lure film and TV projects over the past decade, the rest of the world's caught up and successfully mimicked the model.

Canada's incentive efforts bore fruit in the late 1990s amid a building frenzy in Vancouver. Production spending jumped 16% in 1999-2000 to $3.7 billion, according to the Canadian Film & TV Production Assn. But in the subsequent three years, that figure has crept up only 7% to $3.8 billion.

In order to receive the Canadian incentives -- 16% tax credit for local labor costs plus additional provincial rebates -- producers have to strictly limit the American actors and crew they bring north of the border. Any American on the cast or crew counts against the calculation of the Canadian content required to obtain the incentives.

"Depth is a big problem even in Toronto," one director notes. "Let's say you only bring the stars, so you need a supporting actress in her late 30s -- but anyone who's got the goods has already gravitated to L.A. It's even more of a problem in a place like Halifax because then it's as if you're casting community theater."

Producers concede they can find top-quality crews in Vancouver and Toronto, as good as those in Los Angeles and New York. But when activity surges in the Canuck locations, producers are often forced to use less-experienced below-the-liners who can hamper quality and slow down a shoot.

"My production designer was great, but the script supervisor and first a.d. were weak, and I had a terrible production accountant on a shoot this year," one producer recalls. "It's terrible to be told you're running out of money and then find out you aren't after you've cut to the bone."

But don't go writing an obituary for Canadian lensing yet.

For example, plans were recently announced to build a $130 million studio in Toronto with 1.25 million square feet of space.

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