Negotiations over paying more public money to the Netflix program House of Cards broke down in Maryland Monday — not because of any effort to protect taxpayers from subsidizing Hollywood, but because some lawmakers also wanted the power to seize Hollywood properties through eminent domain.
House of Cards’ future shooting location is now up in the air. But others states are holding their cards tight before making a play for the expensive show.
Maryland’s budget reconciliation ended Monday night without an agreement to hike the incentive Maryland taxpayers give to film producers in order to induce them to shoot in the state.
As reported here in March, Beverly Hills–based Media Rights Capital (MRC), the producer of the popular potboiler, has been trying to persuade the Old Line State to increase its production tax credit from $15 million to $18.5 million. The Maryland senate was eager to pass that spending hike, but a leaked letter from an MRC official to Governor Martin O’Malley infuriated delegates in Maryland’s lower house. In response, a Democratic delegate introduced legislative language ordering the state to use its eminent-domain powers to seize the property of producers who left Maryland after concluding a production deal.
MRC senior vice president Charlie Goldstein informed O’Malley in February that “we are required to look at other states in which to film on the off chance that the legislation [expanding the tax credit] does not pass, or does not cover the amount of tax credits for which we would qualify.”
Goldstein’s letter went on to warn, “In the event sufficient incentives do not become available, we will have to break down our stage, sets and offices and set up in another state.”
Montgomery County delegate Bill Frick, who voted for the Hollywood tax credit and still supports it, responded with legislation ordering the state to use eminent-domain powers to seize the property of any company that claims $10 million or more from the state’s production tax credit and then departs the state.
It’s not clear whether the law could have been used against MRC, which appears to have completed its first two seasons to the satisfaction of all parties. The negotiation was over the show’s third season.
Maryland’s tiny neighbor, meanwhile, is getting ready to roar.
“I’d love to take a shot at ‘em,” T. J. Healy, director of Film Delaware, tells National Review Online. “By the way we have no sales tax. Our room-rate tax is the lowest around here too. We’d love to talk with them.”
Healy cautioned that the First State couldn’t match Maryland’s production tax credit, but indicated that Delaware is designing a program that would compete by combining a credit with a more straightforward, hassle-free business environment. He pointed to Virginia’s program as a model.
Virginia itself is passing on House of Cards, however. “There was a bit of interest but we can’t afford it at this time,” an official at the Virginia Film Office tells NRO. The Old Dominion provides an incentive of 20 percent of qualifying costs.
“We are not currently in negotiations with House of Cards,” echoed Leslie R. Green, director of communications for the D.C. Office of Motion Picture and Television Development. “Of course we are always open and ready to work with anyone that wants to film in D.C., but due to the uniqueness of the District, we cannot provide incentives in the same manner as other jurisdictions do.”
Louisiana’s film office emphasizes the generosity of the Pelican State’s incentives.
“At this time Louisiana hasn’t actively pursued this production,” says Louisiana Entertainment executive director Chris Stelly. “However, Louisiana’s program is currently uncapped and if the producers were looking to locate in Louisiana, we would welcome them into the state and provide them with the same level of assistance we provide any production looking towards our state for their production.”
Media Rights Capital itself declined to comment. In March the company told NRO, “We have had wonderful experiences filming the past two seasons of House of Cards in the State of Maryland and love shooting here.”
State senator Roger Manno, a staunch supporter of the film-production tax credit and proponent of the $3.5 million increase, tells National Review Online he hopes the House of Cards shoot may be saved. “We still have $15 million in tax credits in the budget,” the Montgomery County Democrat says. “The governor has indicated that he is going to work with the senate president to bring that number up through additional money from the Department of Business and Economic Development.”
“We want House of Cards here, want Veep here, and we want other productions,” Manno says. “The message we want to send is that we want and need and are committed to building a permanent film-production program in Maryland.”
Manno calls entertainment production “vital to our economy and our arts sector.”
A 2010 study by the Center on Budget and Policy Priorities, however, concluded that film-production tax credits generate as little as 7 cents for every public dollar spent, and multiple studies have found that they never generate enough tax revenue to pay for themselves.
Manno dismisses these concerns. “Whatever the percentage is, it’s a percentage of an industry that wasn’t in Maryland before the incentive was there,” he says. “We have determined that they make good economic sense for us. It’s not just sexy. I don’t think any of us are wooed by the shows. It’s kind of neat that they’re here. But we have to make a budget. It has to make economic sense.”
Asked about the future of House of Cards in Maryland, Manno replied, “I haven’t spoken to Frank Underwood or the producers.”
Manno will not name any legislators who object to the film-production tax credit on the basis that it is a bad deal for taxpayers, but he hinted that some delegates are insufficiently zealous in defense of the costly incentive.
“What happened was a difference not only in the amount of money but in the level of commitment to this program,” he says.