Montana film industry excited about growth but needs more buy-in from the state
Going into Montana’s 2021 legislative session, a $20 million film and television studio was slotted to open in Missoula, but after an insufficient increase to the state’s film tax credit, the company abandoned its plans.
The 10.7-acre lot will now be home to an electrical trucking facility.
“It was disappointing for everyone in our community,” said Emily Brock, director of economic and land development for Missoula County. “We have a lot of culture … Missoula prides itself on its culture. And so when the production studio decided that they couldn’t open, it was a blow to the arts in our community.”
At the same time, she said Peterbilt, which will build its electric truck facility where Shadowcast Partners LLC once planned to open its studio, will bring stability to the lot and be a beneficial partner to the county.
While the demise of the Shadowcast Partners deal is a disappointment for Montana’s film industry, professionals in the field said it is not enough to stifle the expansion of film and television production in the state, which brought in $1.3 million of total tax revenue from January 2019 to June 2020.
“It would have definitely helped the industry, but not having them here isn’t hurting it,” said Montana filmmaker and industry advocate Lynn-Wood Fields. “The film industry here has so much potential.”
Fields also owns Montana Film Tax Credits, a company that facilitates the sale of the credits from productions to Montanans.
At the crux of Shadowcast Partners not opening the studio was a failed proposal to considerably raise the film tax credit in Montana. In the most recent legislative session, House Speaker Wylie Galt, R-Martinsdale, introduced a bill to eliminate a cap on the credit, set at $10 million. As the bill snaked through the lawmaking process, the credit was altered to include a $250 million cap, but ultimately it was only raised by $2 million to $12 million.
“To build the infrastructure on the scale we were proposing, you really need buy-in from the state to create a tax credit limit that is sufficient to bring a pipeline of productions to fill the facility,” said Joshua Schroeder, of Shadowcast. “So without a significant tax credit in place, it is difficult to get the infrastructure built because lenders aren’t going to lend you money because you can’t demonstrate that productions are going to come to the state.”
Galt, who sponsored the MEDIA Act in 2019, pitched his bill on eliminating the cap as a job creator.
“This is what will bring the quickest job growth to Montana … It will have people come in, spend a little time filming, clean up on their way out, and leave a little bit of money,” he said in a committee hearing on the bill during the legislative session.
One of the lawmakers opposing the bill was House Minority Leader Kim Abbott, D-Helena. In a recent interview, she said she supports growing the film industry in the state but has a philosophically different approach to doing it. Abbott argued Montana can leverage things like its natural landscapes to bring the film industry here instead of bending to the industry at large, which she said has played states against each other to offer the best tax incentives.
“It comes down to a different approach on state spending, and I think direct spending is a better way to go about it,” she said. (The film tax credit) is a state expenditure instead of an appropriation, so when I approach these tax credits, I want to see that there will be a long-term economic impact.”
Film in Montana
Fields said a state needs four things to sustain a thriving film industry — a tax credit, infrastructure, crew and locations. While Montana has a portion of the necessary ingredients, more infrastructure, a higher tax credit, and more workers are needed to ensure the industry’s continued growth.
“Right now, we are seeing a lot of productions coming here because our locations are so beautiful,” she said.
The state also has a small tax credit of $12 million, which is used up by one or two bigger productions, leaving little to no room for smaller independent films. And while those in the industry support a rise in the cap, they caution against an unlimited credit or cap that’s too high.
“There needs to be a balance of growing the industry and making sure that Montana businesses are the ones driving that growth,” Fields said.
“There is no doubt that outside industry is going to come in, but how can Montanans start being the crews, the directors, and the storytellers,” she said. “With an unlimited cap, productions like Marvel could come here, and I don’t know that we have the housing community or the desire to have that kind of production here. I really think indie productions under $10 million are ideal for the state.”
To benefit from the tax incentive, a production has to sell the credit to a Montana state income taxpayer at a discounted price. But since there is not an unlimited number of Montanans, it does not make sense to have an unlimited cap, said Joseph Myer, who owns Cimmaron Studios in Hamilton.
The Montana Economic Development Industry Advancement Act, or MEDIA Act, went into effect on July 1, 2019, and extends through 2029. The program awards a 20 percent transferable income tax credit on production expenditures within the state. The MEDIA Act offers 25 percent compensation for productions that use in-state crews compared to 15 percent for out-of-state crews to encourage local hiring.
Following the implementation of the MEDIA Act, nearly 300 full-time jobs were created by the 117 productions that were filmed in Montana. And those 117 productions had a total economic impact of $47.6 million and $23.9 million of local spending, according to a report by the Montana Film Commission that analyzed the industry from January 2019 to June 2020.
“There needs to be a high enough tax credit to support television series and independent projects but not so high that Montanans still can’t set the tone,” Fields said. She added, “I feel like, in a time when Montana needs high-paying jobs, the state needs to get behind this industry. My sense is the industry is going to keep growing, and for that to happen, we really need the legislature to get behind us.”
The average salary for the 280 jobs created by those productions was $62,857. And beyond the direct economic impact film productions bring to actors and crew members, they also benefit local economies.
“During filming, production often hires local businesses to help support their operations,” the film commission’s economic report said. “From caterers to hotels and hardware stores to transportation, the film industry can have a significant economic impact on various sectors of the local economy.”
Brock, with Missoula County, said having the Shadowcast studios in Missoula would have boosted business: “We all know anecdotally the boon that ‘Yellowstone’ has been to the Bitterroot and Missoula and how impactful these projects can be for the community, particularly the smaller businesses.”
While “Yellowstone” has spun off dreams of moving to Montana for its entirety on air, the first three seasons were filmed in Utah. And it was not until its fourth season and after the MEDIA Act went into effect that the show started filming in Treasure State.
Portraying Montana but not filming in Montana has been a common thread over the years, and to correct that as well as keep up with the anticipated increase in film production due to the Media Act, the state will need to “continually expand its infrastructure in order to see the industry mature,” the film commission’s report said.
But sustaining Montana-led growth has its challenges. One of the significant roadblocks is a shortage of a trained workforce and not being able to film year-round, said Montana Film Commissioner Allison Whitmer.
“[Shadowcast] was planning to have state-of-the-art production facility like you would see in Vancouver or Calgary or Salt Lake City and would have really expanded the ability for larger productions to work in the winter,” Whitmer said of Shadowcast.
Had Shadowcast opened its studio, it would have provided the state with infrastructure for productions to film year-round in the state, she said.
Workforce woes
“It is hard to train a workforce here because they are only going to work for six months,” she said. “Getting to a full year-round with production and workforce and getting those two to match together has been one of our goals.”
She also listed other limitations the state has, like weather, housing availability and hotel space that states like Georgia, where there is an unlimited tax credit, can handle.
JP Gabriel, who owns Filmlites Productions, a Bozeman-based film equipment rental company, said getting a trained crew has been his most significant barrier.
“I lost many of my regular guys to freelance other projects, and it has made it very difficult for me to sustain the amount of workload … Building a crew base of people that will stay in Montana is the long-term goal,” he said.
To help grow the workforce in the state, Fields partnered with the Missoula County and the University of Montana in August of 2021 to start intro to tech and production assistant classes.
The intensive program was made possible through a one-time legislative grant through the Department of Labor and Industry. Since the course ended in August, nearly all of the 14 participants continued to work in the film industry, Fields said.
A provision in the MEDIA Act also aims to keep Montana talent working in the state. Despite having two film schools, one at the University of Montana and another at Montana State University, many students end up going to Los Angeles or New York City after graduating, the film commission’s economic report found.
To combat the flight of Montanans, The MEDIA Act offers a compensation tax incentive of 30 percent to hire college students to encourage local staff participation in big productions in the state.
Among those fleeing to the coastal states are directors, actors and other creative workers, which the report says is an under-discussed yet significant economic driver in the state. In 2019, the report found that 4,400 artists were working in Montana, which is comparable to the number of people employed in the legal occupations industry.
“The cultural capital generated through arts and culture enhances Montana’s regional and national image that has attractive amenities for visitors, residents, and businesses alike,” the report said.
Changes in the Industry
Gabriel, who has worked in the Montana film industry for more than 30 years, recalled its many transformations.
“In the late ’80s and through a lot of the ’90s, we weren’t dealing with a lot of this film tax credit competition with other states, and we were more fighting with Canada,” he said.
Eventually, in 2005, the legislature passed the Big Sky on the Big Screen Act, which created the first film tax credit in the state, but it ended in 2015. When the Montana MEDIA Act went into effect in 2019, he said he noticed a shift in the type of productions coming to the state.
“In the last 10 years, we lived off of commercials with a few feature films sprinkled in, but in the last two years, right as we were starting to get into the pandemic, the doors had been kicked open, and a bunch of small independent films and T.V. shows have been proliferating the state,” he said.
Another positive factor was “Yellowstone” moving its production from Utah to Montana, and he said: “A lot of companies took notice of that, and it really ended up changing the frequency of productions coming to Montana.”
Like Fields, Gabriel said he does not support an unlimited or $250 million cap on the tax credit.
“There would be an absolute flood of money coming out of the state coffers and us not keeping up with the money coming in,” Gabriel said. “You are going to have all kinds of out-of-state interests pouring in, but not building infrastructure. I would rather see organic growth of the industry rather than this gold rush mentality, which is boom or bust.”
He also said the state’s film industry would struggle with a sudden increase of productions with an unlimited or $250 million cap.
“We don’t have the infrastructure or manpower to facilitate the infrastructure of that job growth. We are struggling as it is,” he said. He added, “it is very frustrating seeing most of the crews being from out of state.”
To help with infrastructure growth, Myers converted the Pharoahplex Cinema in Ravalli County into a film studio with 10,000 square feet of soundstage, 5,000 square feet of support space for things like administration offices and hair and makeup rooms, as well as space for set construction.
Myers recognized it’s not the largest studio out there but said he was cautious not to overbuild.
“We looked at the trend of how much was being spent in producing content, and that trend is going down and not up,” he said. “We have fewer big spends like ‘Yellowstone.’ And more and more content providers are heading toward the $5 million to $10 million spend, which is exactly the spend that would fit our studio space.”
Other filming options for productions in the state are Montana Studios, which is developing 50,000 square feet of production space in Butte, and the Yellowstone Film Ranch, a full-scale production studio with 26 structures, including lodging, production offices, storage, catering, and set builds. Another piece of major infrastructure in the state is a soundstage in Bonner. However, it is currently only used by the “Yellowstone” T.V. series.
Galt could not be reached for comment on whether he plans on waging another attempt at increasing the cap in the next legislative session, something film professionals say is necessary for the continued expansion of the industry in Montana.
But Myer, a Hamilton local, emphasized the importance of Montanans leading the way in building infrastructure and growing the industry.
“If we can show that growth in the industry is Montana driven, the hope is that the credit will get raised more in the next session,” he said.