Louisiana Tax Incentives Lure ‘X-Men’ Spinoff ‘Gambit,’ ‘Jack Reacher 2’

Dave McNary
Film Reporter@Variety_DMcNary

Over the past decade, rising from the devastation of Hurricane Katrina, the state of Louisiana has emerged as one of the largest film and television production centers in the U.S. — helped to a large degree by its generous tax incentives, but also by a deep and experienced crew base, and by far lower production and livings costs than those found in the media capitals of Los Angeles and New York.

The big draw — a 30% tax credit on all eligible production expenditures — has made the state a major destination for studios and indie producers alike. Films and TV shows shot wholly or partly in Louisiana read like a showbiz hits list: “The Expendables,” “Pitch Perfect,” “The Curious Case of Benjamin Button,” “Django Unchained,” “Duck Dynasty,” “21 Jump Street,” “Treme,” “Scream Queens,” “12 Years a Slave” and “Jurassic World.”

Until recently, that incentive was uncapped, with no limit on the amount the state could reimburse producers each year. But in June, Gov. Bobby Jindal signed a bill capping the annual tax credits at $180 million and also suspending for a year Louisiana’s tax credit buyback program whereby credits can be cashed in for 85 cents on the dollar. Credits earned after the $180 million cap is reached can still be cashed in the following year. That could be a problem for smaller projects that use credits to cash-flow production.

While the move — made to balance the state budget — set off some alarm bells in the production community, many Hollywood execs believe the concern was exaggerated.

Joseph Chianese, senior VP of taxes, business development and production planning at payroll giant Entertainment Partners — and an expert on incentive financing — says in the past the absence of an annual cap had made producers “very comfortable.” Now, he adds, “You have to think about what you’re doing and when the audit will be done … but I wouldn’t say interest has diminished. Louisiana remains a big draw for producers.”

Patrick Mulhearn, executive director of Celtic Studios in Baton Rouge, says he’s convinced any issues caused by the new cap are temporary. He notes that only $10 million has been redeemed so far in the first three months of the fiscal year.

Mulhearn also points out that all four candidates for governor to succeed Jindal have called for a special session in January or February to change the tax credit rules. “At this rate, it doesn’t look like we will hit the redemption cap in fiscal year 2015-16. Smart lenders should be lending again to independents if they aren’t already,” he says, noting the current shoots include “Salem” in Shreveport and “NCIS: New Orleans” in New Orleans. On the horizon: “Jack Reacher 2” and “X-Men” spinoff “Gambit.”

“I wouldn’t say interest has diminished. Louisiana remains a big draw for producers.” JOSEPH CHIANESE

Putting his money where his mouth is, Mulhearn has purchased 10 acres to expand his facilities. “We are really bullish,” he says.

Not everyone is as optimistic. Hannibal Pictures topper Richard Rionda Del Castro, referring to the temporary suspension of the buyback program, says, “now you have to wait for a year to collect in Louisiana.” Trevor Short, CFO and partner at Nu Image, says the new rules may not be much of a problem for the big studios but the independent sector could be affected.

Fred Baron, executive VP of feature production at 20th Century Fox — which shot “Fantastic Four” and “Dawn of the Planet of the Apes” in Louisiana — counters that the current situation is a temporary bump in the road. “I think this will be a pretty quick fix and will go back to doing business as usual,” he says. “They’ve created a great model that’s production-friendly. Plus, Louisiana is easy to get to; only 3½ hours from L.A. and two hours from New York.”