Cleveland Film Commission Spurs Economic Gains in Cleveland

Cleveland Film Commission Spurs Economic Gains in Cleveland

By Staff Writer
In June 10, 2014
1457 Views

10 years ago it may have seemed like a pipe dream, but thanks to the work of the Greater Cleveland Film Commission, Northeast Ohio is becoming a powerhouse of moviemaking magic. Besides for the inherent awesomeness of seeing Samuel L. Jackson stroll down E. 6th street or chatting with Scarlett Johansson over a beer at the Five O’Clock Lounge or running into Katie Holmes in Tremont, there is a much greater purpose behind bringing film crews to Cleveland. Along with big budget special effects and celebrity sightings, the film industry brings crucial economic benefits to Northeast Ohio that the Greater Cleveland Film Commission is working hard to capitalize on.

What is the Ohio Motion Picture Tax Credit and how does it play into bringing films to Cleveland?

As Ivan Schwarz, the executive director of the Greater Cleveland Film Commission says, “It’s all about the tax credits. The reason they come to Ohio is the tax credits.” The Ohio Motion Picture Tax Credit provides a refundable tax credit that equals 25 percent of in-state spend and non-resident wages and 35 percent in Ohio resident wages on eligible productions, which adds up quickly for movie studios looking to spend millions of dollars.

Would you think of Ohio first when someone asks where movies are filmed? Probably not, and the Greater Cleveland Film Commission knows that, which is why the tax credit was essential. Whereas in the past, productions never would have considered Ohio, the tax credit creates a lucrative incentive that bumps Ohio far up on the list of potential shooting locations. When it comes to how exactly a tax credit is bringing films to Cleveland, it comes down to saving money. Even though Cleveland was relatively late to the game in enacting tax credits for movie productions, it’s making up for lost time by offering especially juicy savings for the film industry. Though Ohio initially created a $20 million tax credit in 2009, that amount was doubled to $40 million by 2012. Noticed the uptick in the amount of superheroes fighting in Cleveland streets the past few years? That’s why.

An “if you build it, they will come” scenario, when states make tax credits available for filmmakers, filmmakers take advantage of them. Though moviemaking is synonymous with California in many people’s minds, a significant number of movies are being snatched away from California by states that offer more enticing incentive packages to producers. For example, Louisiana actually hosted more productions than California did last year. And it’s not just box office giants like the Avengers that the Greater Cleveland Film Commission has been working to lure to Cleveland. Besides for feature-length films, a wide variety of productions qualify for the credit including documentaries, interactive websites, sound recordings, music videos, videogames and commercials. As the Greater Cleveland Film Commission emphasizes, the long term goal is for Cleveland to become a major industry player in the movie business.

So the movie studios are getting a deal, but is there a benefit Cleveland?

In a word, yes. The benefits for making movies in Cleveland are very real and cover a wide spectrum of areas. An independent study done at Cleveland State University in 2012 estimated that for every dollar granted in Ohio tax credits, the state recouped an additional $1.20. The study examined five distinct areas of potential impact by the movie industry: employment, output, value added, labor income and taxes. For each, the impact was the summation of a direct impact (the initial value of goods and services purchased by the industry in the state), indirect impact (the jobs and production needed to manufacture goods and services required by the industry) and local tax revenues (self-explanatory).

Overall Breakdown of Economic Impact of the Film Industry in Northeast Ohio (2009-2012)

Employment Impact

  • The study determined that the 27 projects filmed in Ohio between 2009 and 2012 accounted for 1,143 jobs.
  • 651 were involved directly in the filming.
  • 142 were employed by businesses that supported the filming by providing goods and services to the film industry.

Output

  • The study estimated the impact of the 2009-2012 film productions to be $113 million.
  • $55.2 million was associated with the direct impact, or in the value of the goods and services purchased by the industry.
  • $17.4 million was associated with the indirect impact, or the jobs needed to manufacture the goods and services of the direct impact.
  • $40.4 million was associated with the induced impact, which is associated with businesses not directly associated with the production but that recorded an increase in revenue (food and drink establishments, real estate establishments, and medical practitioners).

Labor Income

  • Labor income consists of household earnings from the productions, and was estimated to be ~$35 million.
  • $16 million was associated with the direct impact.
  • $6 million was associated with the indirect impact.
  • $13.7 million was associated with the induced impact.

Tax Impact

  • $9.9 million total in total tax revenue associated with filming in Ohio.
  • $5.5 million was in federal tax revenue.
  • $4.5 million was in state and local tax revenue.
  • Northeast Ohio specifically accounted for 77% of the taxes garnered.

There is some disagreement on how significant the overall return on the Ohio Motion Picture Tax Credit currently is, but it’s important to keep in mind that the Greater Cleveland Film Commission is thinking long term. The end game ultimately is not to immediately make a quick buck for Ohio, but to create a permanent industry in the state.

*For more detailed analysis on the economic impact of the film industry in Ohio during 2009-2012, refer to Clouse (2012).

What’s does the future hold for film production in Northeast Ohio?

If the past few years are any indication, Clevelanders should expect to see film productions taking over towns for many years to come. In the past year alone, the Greater Cleveland Film Commission was successful in bringing several high-profile projects to the city including Captain America: The Winter Soldier, Draft Day, Jenny’s Wedding, Fear Clinic and Criminal Activities. Captain America and Draft Day were even selected to hold special Cleveland premieres. If the Greater Cleveland Film Commission has anything to say about it, film production in Northeast Ohio will not be wrapping for quite some time.

Staff Writer

So who is this mysterious staff writer? Could be anyone really, as long as they meet our very strict criteria. 1) Worked with us in one capacity or another. 2) Have something pretty interesting to say. 3) Want to use our blog to say it. See? Told ya they were strict!