There is no doubt the film industry is emerging to be the biggest hope for Albuquerque and New Mexico to diversify both economies. The unmistakable evidence are the immense investment in the city and state by NBC Universal and the Netflix purchase of Albuquerque studios as the site of their new production hub. NBC Universal is the second major studio in less than a year to announce they are opening film production facilities in Albuquerque. However, one potential problem that New Mexico needs to address is the impact restrictive abortion laws could have on New Mexico’s expanding film industry. The New Mexico legislature needs to take aggressive legislative action to protect abortion rights and a woman’s right to choose.
THE NBC UNIVERSAL DEAL
On June 14, NBC Universal announce it will open a studio in Albuquerque as part of a 10-year venture with Garcia Realty and Development. The media giant will be taking over, renovating and creating sound stages at a now vacant industrial building south of I-40 on Commercial Street, north of downtown in the vicinity of historic Martineztown.
The NBC Universal plans are to redevelop the warehouse into a state-of-the-art television and film studio with two sound stages, offices and a film production mill. The turnaround time for the renovations is very short and it’s expected to be complete in the fall of 2019.
The media giant is expected to provide more than 330 full-time jobs year-round at the film studio. NBC Universal employees will earn about $58,000 a year which is a far cry from the minimum wage jobs the city is use to announcing with the arrival of new businesses. The studio operation is projected to generate an economic impact of $1.1 billion over a 10-year period.
Once complete, the studio will be used by NBC Universal to produce scripted productions for many platforms, including broadcast and cable channels.
The state’s Economic Development Department is providing $7.7 million through the Local Economic Development Act (LEDA) to the redevelopment and production commitment. The City of Albuquerque will provide another $3 million from its LEDA fund which was approved by the Albuquerque City Council on June 17, 2019 by a unanimous vote.
NBC UNIVERSAL DEAL IN A NUTSHELL
The Albuquerque Journal provided a bullet point nutshell of the NBC Universal deal as follows:
•The Warehouse [that is to be renovated] was constructed in 1976 for Richard’s Distributing, a beer distributing company. The building was sold to Southern Glazer’s Wine and Spirits and has been largely vacant since 2017.
• There will be two sound stages, offices and a fill production mill space.
• City of Albuquerque has completed street improvements, curbs and sidewalks with LED solar street lights to be installed.
• The 300-plus workers employed by NBC Universal will earn an average wage of $58,000 and support another 497 indirect workers with an average wage of $41,000.
• NBC Universal will develop a marketing strategy with the state and city to promote Albuquerque and New Mexico with the value to be in excess of $500,000 per year.
• NBC Universal will provide at least $55,000 per year to fund existing workforce development initiatives in the state.
• NBC Universal’s director mentorship program will provide a stipend to an aspiring director from the local community who will shadow a director for a period of one to three episodes, including pre- and post-production.
You can read the lengthy Journal story at the below link:
THE NETFLIX PURCHASE OF ALB STUDIOS
On October 8, 2018, it was announced that Netflix was buying Albuquerque Studios.
The State contributed $10 million of Local Economic Development Act funds. The City of Albuquerque contributed another $4.5 million of Local Economic Development Funds. Albuquerque beat out other places such as Denver, Salt Lake City, Austin, New York, Georgia and Los Angeles. The Albuquerque site will be Netflix’s first hub purchased in the United States.
It is estimated that at least 1,000 well-paying jobs per year will be created. The jobs will run the gamut of film and TV production work, most of which is project-based contract labor. Many of the jobs are expected to pay $70,000 a year. The purchase deal also calls for $1 billion worth of production spent over 10 years which will have a dramatic effect on the City and State economies.
Albuquerque Studios is an enormous complex that includes 9 sound stages, a backlot and management offices. New Mexico’s other 4 production studios are I-25 Studios, Garson Studios, Santa Fe Studios and Las Cruces Studios as other productions seek studio space for their projects.
In 2006, Albuquerque studios was a $74 million, 50-acre project featuring eight sound stages, production officers and support space. On July 24, 2006, the groundbreaking of Albuquerque Studios occurred and once completed, it was and still is a state-of-the-art movie-making facility. Notwithstanding the sophistication of the facility, Albuquerque Studios for 17 years has been a rental house to production companies and was for sale for a number of years.
The Netflix purchase will no doubt benefit the other major studios in the State that will likely be asked to provide additional overflow work. The jobs that will be created in Albuquerque run the gamut of film and TV production work, most of which is project-based contract labor. With the Nextflex purchase, you will have a production and distribution company that can create that will take it over and start producing far more projects.
NEW MEXICO’S EXPANDED TAX CREDITS FOR FILM AND TELEVISION PRODUCTION
On March 29, 2019, Governor Michelle Lujan Grisham signed into a law legislation expanding tax credits for film and television productions in a bid to bring more business to New Mexico’s studios as well as its cinematic mesas and small towns. Governor Michelle Lujan had called upon the legislature to abolish the annual $50 million cap on film rebate spending cap, but the legislature instead more than doubled it. The enacted legislation also pays off up to $225 million in tax credits already owed to the film and television industry. The film and television industry has hit the $50 million annual cap on tax credits in recent years, leaving the state with a backlog of $382 million through fiscal year 2023.
The enacted law more than doubles the original cap of $50 million to up to $110 million in in tax credits for film and television productions each year. That cap does not apply to production companies that have purchased or signed a 10-year lease for facilities, like Netflix, which is setting up shop in Albuquerque. The new law also provides an additional 5 percent credit for productions more than 60 miles outside of Bernalillo and Santa Fe counties, a measure that proponents argued would promote the industry in cities like Las Cruces as well as in rural areas of the state. The law also requires the state to collect additional data on how the credits are used.
FILM TAX CREDITS CRITICIZED AS GOING TOO FAR
Critics of the film rebates contend that the legislature has gone way too far with the rebates because companies like Netflex and NBC Universal that make a ten year commitment to film here because there is no cap. Under the rebate legislation, companies like Netflez and NBC Universal will be allowed to keep collecting upwards of 30% of what it costs to produce films and TV shows no matter how much is being billed by the industry. The argument critics make is that companies like Netflex and Universal could very easily take the incentive over the $110 million a year impacting the state’s budget in a very negative way.
For more on the criticism of the film rebated see June 17, 2019 post entitled “Hefty NM Film Incentives Draw Renewed Questioning In Wake of NBCU Deal: Too Generous? Blowing A Hole In State Budget? Other States Back Off” at New Mexico Politics With Joe Monahan at the below link:
On June 16, 2017, State Senate Finance Commitee Chairman John Author Smith told an interim legislative commitee that if the price of oil does not change drastically, the State could once again recieve between $1.1 billion to $1.3 billion in additional tax dollars next year. If that happens, it will be the second year in a row that the state will get a $1 billion plus windfall. The oil boom in Southern New Mexico is going strong and royalties paid to the state continue to increase. The additional revenues could be relied upon to continue with the film tax credits to some extent.
RESTRICTIVE ABORTIONS LAWS IMPACT FILM INDUSTRY GROWTH
Nine states have now enacted laws restricting abortions an attempt to prompt the United States Supreme Court to overturn Roe v. Wade which makes abortions legal throughout the country, protecting a woman’s right to choose and declaring unconstitutional state criminal law-making abortions illegal. Most of the new restrictions are in the South and Midwest. The State of Georgia has enacted one of the most restrictive abortion laws in the county.
More feature films are made in Georgia than in any other U.S. state. Its film commission even likes to call Georgia “Y’allywood.” But a restrictive abortion law passed earlier this year is threatening the film industry in Georgia. Ten major film and TV studios have announced they might halt production altogether in Georgia. Some of the most popular shows filmed in Georgia include the science fiction hit “Stranger Things”. “Black Panther” and “Avengers: Endgame” are two Disney blockbusters that were shot partly in Georgia.
Ted Sarandos, who runs Netflix studios, said the Georgia law would restrict the rights of his female employees and his company would reconsider shooting there. Disney CEO Bob Iger made a similar comment in an interview with Reuters:
“Well, I think if it becomes law [which it now has], it will be very difficult to produce there. I rather doubt we will. I think many people who work for us will not want to work there. And we’ll have to heed their wishes in that regard.”
Netflix, Disney, Warner Media, AMC Networks, NBC Universal and CBS Corp. and its Showtime subsidiary have all threatened to pull their business from Georgia and fear is rippling through the state’s film production industry, now bigger than California’s, according to Film LA.
Last year, a record 455 film and television productions generated an estimated economic impact of $9.5 billion, according to the Georgia state department of economic development. The film and TV industry is responsible for more than 92,100 jobs and nearly $4.6 billion in total wages in Georgia, including indirect jobs and wages, according to the Motion Picture Association of America, a trade union group.
NEW MEXICO’S 1969 ABORTION LAW
An NBC/Wall Street Journal Poll on abortion was taken on June 8, 2019 and compared to an identical poll taken on September 19, 2008. The result was telecast on the June 16, 2019 Meet the Press show. The poll was one question “Should abortions be legal all the time/most of the time”. Comparing the two polls reveal an increase in support of abortion along both gender and party lines. Following are the results comparing “NOW” to the year 2008:
Men: NOW: 52% favor, before in 2008: 50% favor
Women: NOW: 60% favor, before in 2008: 49% favor
Democrats: NOW: 81% favor, before in 2008: 68% favor
Republicans: NOW: 29% favor, before in 2008: 25% favor
During the 2019 New Mexico legislature, one of the biggest failures was the failure to repeal the 1969 law that criminalizes abortion, except in cases in rape. The New Mexico statute now on the books criminalizing abortion is not enforceable as a result of the United State Supreme Court ruling in Rowe vs Wade that legalizes abortions. “Right to choose” advocates are concerned that the United States Supreme Court will reverse the Roe vs. Wade decision now that conservatives are in control of the United States Supreme Court. If that happens, New Mexico’s 1969 law would be enforceable.
COMMENTARY AND ANALYSIS
Governor Michelle Lujan Grisham who attended the press conference announcement for the NBC Universal had this to say:
“I’m incredibly excited to announce today NBC Universal has chosen to plant their flag here in New Mexico, establishing a world-class production facility in Albuquerque. … New Mexico is the place to be for the future of the film and TV industry. … We are growing New Mexico’s film industry, diversifying our economy and creating exciting jobs – this is a home run deal”.
Governor Michelle Lujan Grisham was not exaggerating nor embellishing in the least with her remarks. It is not far fetched to envision New Mexico replacing the State of Georgia as the number one state for feature films than in any other U.S. state. The New Mexico film industry has been growing steadily for more than 17 years. Albuquerque has regularly been ranked in the top 10 of the trade magazine Moviemaker’s best places to be a filmmaker.
With NBC Universal coming to Albuquerque and the purchase of Albuquerque Studios by Netflix, the film industry is clearly in the future of Albuquerque and the best hope at this point in diversifying our economy. Last year alone, the film and TV production industry brought in over $180 million of direct spending to the city and state. Far more important, jobs that will be provided by both NBC Universal and NETFLEX are a far cry from the hourly wage jobs provided by the “call centers” that the city has become accustomed to being announced.
The City and the State need to continue with efforts that will insure that our education institutions such as the New Mexico Community College continue to offer a trained work force. Both the City and the State need to create more incentives to build and guarantee that the industry continues to prosper in New Mexico.
Albuquerque and New Mexico need to pursue with a vengeance the real growth industry like heath care, transportation and manufacturing, and the film industry to diversify our economy. Public-private partnerships in the growth industries where ever possible should be encouraged and developed. Special emphasis and support should be given to Albuquerque’s and New Mexico’s film industry which is developing, expanding and proving to be very successful in providing well-paying jobs.
Now that the United States Supreme court has a conservative majority, the chances are increasing that the United States Supreme Court will reverse Roe vs. Wade which could very well mean New Mexico’s 1969 law is again enforceable. A reversal of Roe vs. Wade will become even more likely if President Trump is given another opportunity to appoint a third conservative judge to the Supreme Court.
The New Mexico legislature’s failure to repeal the 1969 law that criminalizes abortion may be a dark cloud forming around New Mexico film industry that could jeopardize the successes made in attracting the industry to the state. Governor Michelle Lujan Grisham and the New Mexico Legislature would be wise to again make an effort to repeal the 1969 criminal abortion law and pass legislation that affirms in a woman’s right to choose and access to abortion and prenatal healthcare. The New Mexico legislature should take steps to amend the New Mexico constitution to protect abortion rights and a woman’s right to choose.
The fact that Universal NBC and Netflex are coming to Albuquerque and New Mexico, coupled with more than doubling the film tax credit to $110 million, ensures the state and city will indeed be a real contender in the film industry nationally and globally. The Governor and the legislature will no doubt have to monitor the film industry tax credit to insure that the credits are not dominated by the mega production companies and perhaps alter, reduce or abolish the tax credits in one form or another. The fact that the State could once again receive between $1.1 billion to $1.3 billion in additional tax dollars next year from oil and gas revenues should be sufficient cause to continue with the film tax rebates.
For now, its “lights, camera, action and jobs!” for New Mexico.