City Loan Program for Filmmakers Proposed

Paramount. Universal. Los Angeles City Hall?

Movie producers who seek financing from well-known studios for their films may soon be able to turn to a new source.

Concerned about the flight of productions to Canada and elsewhere, the City Council agreed Friday to study the creation of a loan fund for film and television productions to compete with financial incentives offered by foreign governments.

City Councilman Mike Hernandez authored the proposal as a way to protect Los Angeles’ position as a leading location for film production.

“Retaining motion picture production and production-related jobs in Los Angeles is vital to the economic well-being of the region,” Hernandez said.

The original idea came from the Entertainment Industry Development Corp., which was formed by the city and county to promote film production in Los Angeles County.

Cody Cluff, the group’s president, said that the proposal still has to be fleshed out but that it is one way Southern California can be more competitive.

“It’s one tool,” he said.

Under the proposal, the city would help arrange gap financing for productions with an overall budget of $5 million or less. The smaller-budget productions include many television movies, more than half of which were produced outside the United States in 1997-98.

Loans would be extended only on condition that a percentage of filming be done in Los Angeles. The loan would be guaranteed by a completion bond, and the collateral would be a contract for distribution, according to Hernandez.

Several options will be explored for structuring the city’s financial role.

Hernandez said that bonds or federal grants might be used as seed money for a revolving fund for the loans, but that the program could be structured to simply leverage that money as a guarantee on bank loans at lower interest rates.

If bonds are issued, the city’s tax-exempt status could help reduce the interest rate, said Cluff, who suggested that a nonprofit organization could be set up to oversee the program.

A representative of the independent film industry agreed that the proposal just might help keep more small productions in Los Angeles.

“It’s a good idea,” said Kathy Morgan, chairwoman of the American Film Market Assn., who represents independent filmmakers.

“For us, we are working on such a slim margin,” she said. “Independents will go wherever they can get the most advantageous deal. The filmmakers would run to, not away from, any place where they could get a break.”

But the proposal received a thumbs down from one taxpayer group, and even council members who voted for the feasibility study said they have a lot of questions that need to be answered.

Councilman Joel Wachs said that no general fund money should be used and that guarantees against loss would be required.

Wachs said the loans would have to be structured so the city would never be forced to recoup its investment by distributing films itself.

“There are obviously issues that have to be addressed,” Wachs said. “But I think it’s worth taking a look at it to see if it is feasible.”

Kris Vosburgh, executive director of the Howard Jarvis Taxpayers Assn., said it is “ludicrous” to consider using any taxpayer funds to help private companies.

“It’s particularly onerous to see taxpayer money being lent to what is a high-risk industry, “ Vosburgh said.

Wachs, known as a staunch proponent of free expression, said decisions on whether to extend loans should not be based on whether films are controversial or not.

“You can’t make content-oriented judgments,” he said. “You can’t have it become political or have censorship.”

Hernandez said worry about content is premature, adding: “The question right now is: Can we do it? We haven’t addressed the issue of content.”