'VEEP' and 'Cards' bringing money, glam to our gritty city

Only three years ago, Baltimore and Maryland were all but out of the TV and film production business. After the glory years of “Homicide,” “The Corner,” “The Wire” and tens of millions of HBO dollars spent here on Maryland crews and materials, state funding for incentives had ended, and Hollywood had left Baltimore in its rear view mirror for what looked like good.

But last Monday, Media Rights Capital and Netflix were back in town with stars like Kevin Spacey and Robin Wright and all those big, white Haddad's trucks to start filming season two of “House of Cards,” a series that last year had an economic impact of $140 million on the area, according to the Maryland Film Office.

On Wednesday, HBO announced that it had renewed the Julia Louis-Dreyfus sitcom “VEEP” for a third season of 10 episodes to air in 2014. Season one of “VEEP,” which consisted of eight episodes, had an economic impact of $30 million, the state says.

That’s a lot of money — $170 million for one year — in these uncertain economic times. Heck, it would be a lot of money in the best of times for a city like Baltimore.

And beyond the money, there’s the bit of excitement and maybe even sense of civic cool in having Spacey, Wright, Louis-Dreyfus and the other actors, directors and producers like Armando Iannucci, Beau Willimon and Frank Rich showing up at area restaurants, concerts, Ravens and Orioles games as well as big events like the Preakness.

I think we can all agree that when it comes to national and international media images, Baltimore’s had about all the grit and crime imagery any city outside of Detroit could ever want. What we’ve long needed is a little glamour — glamour that runs deeper than Stacy Keibler dating George Clooney. “House of Cards” and “VEEP,” two smart, politically savvy and ground-breaking productions, bring that cachet with them.

But there are critics who question whether having such productions filming in Maryland is worth what the state offers in incentives to attract them. Funding for production incentives rose from $7.5 million in fiscal year 2013 to $25 million in 2014 as a result of action taken in the last legislative session. Both state officials and the producers say Hollywood would not be here without the incentives.

“Obviously, incentives do generate economic activity, but I would question that figure that the O’Malley administration is throwing around,” Christopher B. Summers, president of the conservative Maryland Public Policy Institute, told me last week as I reported on an announcement from Gov. Martin O’Malley's administration on the economic impact of “House of Cards.”

“The Maryland legislature is down on bended knee handing these tax credits out to the film companies when it’s done nothing for the past several years but raise taxes on Maryland businesses and taxpayers,” Summers added. “So why should Marylanders spend more on the film industry? Perhaps, they [the General Assembly] should consider tax policies that lower taxes on everyone in Maryland.”

While there is certainly room for philosophical disagreement on the concept of states providing incentives, particularly in challenging economic times, let’s at least have the facts when we have that debate.

Economic impact assessments can vary from analyst to analyst depending on how they calculate secondary effects of Hollywood spending, says Anirban Basu, CEO of the Sage Policy Group Inc., an economic and policy consulting firm in Baltimore.

But here are some firm figures: “House of Cards” employed 2,200 Marylanders as crew, actors or extras and bought goods and services from 1,800 local vendors. “VEEP,” meanwhile, employed 978 Marylanders and spent money with 1,100 local businesses ranging from hotels to caterers to lumber yards and paint stores in its first year here.

Those figures come from independently audited reports filed by the producers with the state in applying for tax credits, according to Jack Gerbes, director of the Maryland Film Office.

“The direct effects are known or at least should be — there should be a record of how many people are hired or contracted to do work,” says Basu. “There should be a record of payments to labor either in the form of wages/salaries or contractually. There should also be a record of payments made to contractors. These are the direct effects, and calculating those is largely an accounting exercise.”

But Basu adds, “Where there is room for disagreement is in the categories of indirect and induced effects. Economists and others disagree about the extent of those multiplier effects.”

Basu uses the example of producers hiring a local set decorator to work on their film or TV series. Her or his salary is a direct effect. But when the decorator hires assistants and other workers because she has more work for her local company, that’s an indirect effect. And induced effect would be the money the decorator spends at lumber yards or furniture stores buying and building props for the sets.

“It’s impossible for me to prove or disprove that $140 million economic impact figure for ‘House of Cards,’ because I don’t have the raw data,” says Basu. “But I will say this: It is conceivable. Several years ago, we did an analysis of film and TV making in a Maryland context, and we found that the multiplier effects are quite large, because there is so much involved in making a film or TV series.”

Basu did that study, “An Economic Assessment of Maryland’s Film & Television Production Industry and Policy Implications,” in 2010.

In 2011, I interviewed Baltimore set decorator Tiffany Zappulla about her work on HBO’s “Game Change,” a made-for-TV movie about the 2008 presidential election. Without using the economist jargon of “induced” and “indirect” effects, she offered testimony to Basu’s model of how the money flows through a community when Hollywood comes to town.

Zappulla pointed to consignment, antique and second-hand furniture stores that had supplied TV series like “The Wire” and then all but went out of business after production ended in 2007. They are back up and running thanks to HBO’s return, she said. The film money she and others spent in such shops gave the store owners room to breathe in a very tight economy. And as their stores added hours, they added workers.

I have covered the local TV production industry since 1989, and there’s another factor that’s often overlooked in debates about incentives and TV production: Baltimore has a vibrant creative community. It extends from schools like the Maryland Institute College of Art and such neighborhoods as the Station North Arts and Entertainment District through the hundreds of cast and crew members who have worked with John Waters, Barry Levinson, David Simon and Tom Fontana.

“Filmmaking and TV-making really fit this community of Baltimore,” says Basu. “This is an irreverent community, it’s a quirky community, it’s a creative class community. It is home to MICA and the Peabody Institute and other institutions like Towson University that emphasize the arts.”

After “The Wire” ended, many members of that community had to leave Baltimore to find work worthy of their talents. It’s nice to feel their creative energy again back on the soundstages, studios and streets of Baltimore this spring.



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