The deafening sound of silence

For the past couple months, we, the citizens of Hopkinton, have heard no official word about the fate of the ill-conceived movie studio.  Yesterday, the Providence Journal published an article indicating that the deafening sound of silence we have heard from the Town Council and the developers was indeed the death knell of said studio.   I say good riddance to bad rubbish.

Hopkinton Loses Shot to Be Little Hollywood

By Maria Armental, Journal Staff Writer

HOPKINTON –– A proposal to build a film studio and hotel near Route 95 at Exit 2 in Hopkinton is officially off the table, town and state officials have confirmed.

Supporters of the movie studio proposal blamed the state’s annual $15-million cap on movie production tax credits –– which the project’s lead sponsor, Rep. Brian Patrick Kennedy, D-Hopkinton, called the “death knell for the project” –– for derailing the proposal, which hinged on a 20-percent transferable tax credit on construction costs, or roughly $15 million.

The developers did not comment, but a property owner whose land was under option and a real estate broker who worked with the developers confirmed last week that most of the options had expired in May and June. The developers did not exercise their right to renew the options for another year.

Dorothy Reynolds, whose family owns and operates the Brook Knoll Farm, where some land had been optioned, said the family’s lawyer had tried unsuccessfully to get official word from the developers.

Under the one-year agreement that has since expired, she said, the family was allowed to continue using the land until construction began.

The options were never recorded in town.

Georgia Ure, a Hope Valley real estate broker, said some of the options are still active, but declined to comment on specifics, citing confidentiality.

Kevin R. Gould, of Advocacy Solutions, the project’s public relations firm, said last week he did not know the status of the options and did not comment on the status of the project.

As originally presented –– plans were never filed –– a development consortium backed by Pacifica Ventures of Santa Monica, Calif., proposed to build a $75-million studio with eight sound stages totaling 155,000 to 225,000 square feet; about 75,000 square feet of production offices; 10,000 square feet of executive offices; about 75,000 square feet of mill and welding space for set and sound-stage creation; a back lot for outdoor sets, trailers and parking; and buildings for cafeterias and storage. The proposal also called for a 150-room hotel.

The developers –– Hal Katersky of Pacifica Ventures in Santa Monica, Calif., along with Ralph Palumbo and Anthony DelVicario of Halden Acquisition Group in Providence –– had stressed the potential economic stimulus and job creation, based on their experience with a similar studio Katersky built in Albuquerque, N.M.

Kennedy, one of the sponsors of legislation that would have provided tax credits for the creation of film studios, said he hadn’t heard anything official from the developers but assumed the deal was off given the tax credit cap, the failure to approve tax credits for the creation of a film studio, and talk of other movie studios in Massachusetts and Connecticut.

“All of the incentives to create a project of this kind have disappeared,” Kennedy said, adding, “Our loss will be some other state’s gain.”

“I’m disappointed because I think this would have been a great project for Hopkinton and for the state of Rhode Island. Unfortunately, there weren’t enough progressive-thinking legislators.”

Katersky is moving forward on plans to build an $85-million studio in Chester Township, Pa.

I am hoping Kennedy will be one less “progressive-thinking” legislator sitting up in Providence come November 5th.  And what the hell does that even mean?  How does giving a giant corporation public welfare amount to a single progressive ideal?  Please explain further because it seems anything but a progressive mentality.

Oh, and American Kuhne is opening up this week, right?  Or is it next week?  Can anyone tell me how many NEW JOBS that created?  Considering it just moved from Norwich to Hopkinton, I am betting that the number is precious few.  Maybe 2 secretaries?

“On The Auction Block Again”

According to this mornings Projo, 360 acres on Dye Hill Road are on the auction block again.  This is the plot of land that was slated for the Bushy Brook development.  I never paid much attention to that development but can remember not being impressed.  My most vivid memory was a Town Council meeting in which one of the principals associated with the development got upset at John Matson and a yelling fight ensued.  Thanks goodness Bev Kenney was there to break it up, clearly that was not the kind of thing she meant when she asked the gentlemen in the room “what’s your pleasure”.  

The article goes on to indicate that the most recent use for the property was a proposed subdivision of 110 single family houses for residents 50 and older, plus a bunch of condos.  I assume that the large subdivision on Clark Falls road has died of a similar fate as this one, no financing and no one buying houses.  All in all, I’m rather pleased.  I would prefer we not turn Hopkinton in to the next Cranston, Warwick or Smithfield.  Who says the worst recession since the Great Depression isn’t good for something?  I would say that killing off shoddy housing developments is quite an acheivement.  What the citizenry could not accomplish, economics has handled tidily.

Interestingly, the article mentions that some of the people involved in this property development were the same as those involved with the movie studio.  And in 2006, it appears that the developers tried to strong-arm the planning and zoning commission with a lawsuit but failed and their application ended up being rejected.  Neither of these facts instill confidence.

Developers have been “mum”

So I asked in the last post if the Town Council has heard back from Katersky on the fate of the movie studio.  Apparently not, says the Sun,

He [Kennedy] introduced legislation for a one-year, 20-percent tax credit for movie production studio construction — a bill that ultimately died in the General Assembly — days after plans were introduced in February for a $75-million studio in Hope Valley. He said he drafted the bill, which would have given developers a $15-million break, with House Speaker William J. Murphy’s office after seeing plans for the first time at a Statehouse press conference.

Developers have been mum on the project’s fate, though lawmakers have presumed that it was killed after the state’s existing film production credit was capped at $15 million — contradicting a contingency that developers said they needed to continue with plans.

“It would be my hope that people noticed that I worked very hard with Sen. [Kevin A.] Breene to bring this project to the town of Hopkinton, but unfortunately this was not the year for this to take place,” said Kennedy, citing cuts to other state programs to close this year’s anticipated $425-million state deficit.

I guess that is the best we’re going to get for now.  But I would like to address Kennedy’s record for just a second.  Firstly, the movie studio was a bad idea.  I’m OK with letting people try out bad ideas, we all have to learn from our mistakes, but Kennedy, Cordone and others apparently jumped on this bandwagon without putting any research into it’s feasibility or it’s managing partner.  That was dumb and sloppy.  There are currently four other studios in development in New England and at least two more in Pennsylvania.  This is what is a called a “saturated market”.  I’ve called it the bandwagon going over the cliff and I think you’ll agree.  

But as far as Kennedy is concerned, he crossed the line when he supported the Chariho revote in the legislature.  He didn’t need Hopkinton’s permission to support the authorization of a bond revote, but he should have had the common courtesy for the Town Council and the the Hopkinton citizens to oppose the authorization.  He does not have a Richmond or Chariho constituency.  He represents Hopkinton and a sliver of Westerly. Perhaps his personal feelings may be that the bond is necessary.  Unfortunately, a major portion of his constituency did not support the bond.  When the will of the people is trampled underfoot, we have a problem.  A big problem.  As a result, I’m voting for his opponent.  

She’s from Westerly, which is unfortunate (but just barely, she lives close to the Hopkinton/Westerly town line), but she made the following comments in the same article,

Similar to prior remarks from Kennedy, she said economic development is essential to increase Hopkinton’s tax base, adding that as part of her profession, “We’re constantly working to try to bring people to the Hopkinton area to build.” And Richmond, like Kennedy, noted the merit of housing rehabilitation efforts in the North End.

 
But in luring developers to the area, she said, “We can’t give the farm away.”

 
“Tax incentives are wonderful to a point, as long as they comply with state of Rhode Island regulations,” Richmond added. “I think they’re ideal, but you can’t afford to bring in these large companies who want every­thing for nothing.”

 
When asked if she thought that happened with the movie studio deal, she replied, “I’m not familiar with exactly what they are negotiating, and it’s all behind closed doors at this point.”

I think I like this woman.  I just wish her name were not “Richmond”. 

I’m sorry ma’am, but he died on the table…

According to the June 22nd edition of the Providence Journal, the tax credits for the Hopkinton movie studio were “not approved” as the RI Legislature passed next fiscal year’s budget onto the governor and closed up shop for the summer.  A search of the RI Legislative database indicates that the bill was tabled on May 28^th and no further action has been taken, effectively killing the bill until the next session convenes later this year.  Hal Katersky’s people have said they will not come to Hopkinton without the “movie studio” credit so unless they change their minds, I guess we can all agree that Elvis has indeed, left the building.  You can read the text of the bill below, it’s fascinating:

http://www.rilin.state.ri.us/billtext08/housetext08/h7456.pdf

Going back a little further, it seems that not everyone in the State is so convinced this whole project isn’t just an exercise in futility.  The Providence Journal reports from May 19^th,

Costantino [chair of the House finance committee] questioned whether the state can afford to assist a movie studio, given the budget deficit.

“If you’re going to say you have jobs, then you’ll have to prove you have the jobs and then you’ll get the credit,” Costantino said, offering a possible amendment. “It’s as simple as that because I don’t think Hopkinton wants an empty building.”  [Hopkinton Underground Note:  Damn straight, says I!]

And from the same article, we learn that Rhode Island already has a movie studio in North Kingstown.  It’s small but it’s fully functional.  Unfortunately, business is slow.

What nobody said in last night’s hearing is that Rhode Island already has an 85,000 square-foot studio. North Kingstown’s Kay Studios offers shooting and production spaces and five acres of outdoor lots. Kay also owns a smaller facility in East Providence that’s set up for special effects and television shoots. 

Now the guys who run this operation say that business is slow because we wanted to implement a 20% cap on movie production.  This didn’t happen however, because the amendment to the law was tabled, which included the 20% cap plus the movie studio.  The current law can be found in section 44-31.25 of the RI statutes and limits the credit to 25% of a motion picture productions investment.   The law reads as follows:

The amount of the credit shall be twenty-five percent (25%) of the state certified production costs incurred directly attributable to activity within the state, provided that the primary locations are within the state of Rhode Island and the total production budget as defined herein is a minimum of three hundred thousand dollars ($300,000). The credit shall be earned in the taxable year in which production in Rhode Island is completed, as determined by the film office in final certification pursuant to subsection 44-31.2-6(c).

Remember how I said these credits can be sold?  That’s all spelled out in section 44-31.2-9, if you are interested.

But the folks at Kay Studios say that our tax cap is causing LA angina over filming in Rhode Island, driving production to Massachusetts.  Excuse me for saying so, but that is a load of crap.  Massachusetts already has an established production infrastructure and the city of Boston.  How many movies have you seen filmed in or near Boston?  The answer is hundreds.  How many have been filmed in or around any of Rhode Island?  The answer is a half-a-dozen.  Massachusetts is a better site with a famous city, famous teams and gets national play.  We simply do not.  It has little to do with a 20% vs. a 25% credit (both RI and MA have a 25% cap right now into the Fall). The exact quote from this article is:

“We’ve heard L.A. is not looking at Rhode Island because they’re not sure if we’re committed to the movie industry,” Gormley said. “So for now we’re on hold.”

And I have heard that the moon is made of cheese but I’m not planning on building a lunar cheese factory any time soon.  And one more note, they are now planning on building two movie studios in Massachusetts, outside of Boston.  But why not put them in the Berkshires, it’s such a lovely place?  Because it’s all about location, location, location and niether we nor the Berkshires have it. 

A Day Late And A Dollar Short

I was listening to the Dan York show the other day and he was interviewing Governor Carcieri. I don’t usually listen to York, he spends a lot of his time fanning the flames of discontent and whining without actually having any facts. That aside, he was lobbing softballs at the Governor and he asked him about casinos. Carcieri said something very insightful (for a change). He pointed out that when every state has a casino, it no longer benefits any state to have a casino. He didn’t clarify the issue beyond that but he is right. People will go to a casino more frequently when it is close and if you are not drawing out-of-staters, it’s just taking the money from your own low and low-to-middle class. It makes them poorer and it makes the state poorer.  More specifically, he called it just another tax and that’s close to the truth.  The truth is, however, that a tax is much better because at least all the money that you take from these poor suckers then goes straight to the State and Harrah’s doesn’t get a cut.  How much money do they need anyway?

The same is pretty much true for movie studios. If everyone has a movie studio, then there is no real benefit to anyone having one. Lets be honest, there is no way that New England could support a movie production facility (like the one being proposed at exit 2) in every state. It is unlikely that there is even a need for two of them. And that is really the crux of this post.

Plymouth Rock Studios (http://www.plymouthrockstudios.com/) is being proposed for development in Plymouth Massachusetts.  It appears to be very similar to the operation being proposed for Exit 2, but with some notable exceptions:

1.  Plymouth Rockis being built at $282 million.  The Exit 2 Project is only a $75 million venture

2.  Plymouth Rock is being built by people who actually ran movie studios.  The Exit 2 Project is being proposed by a guy who has a hard time staying off the wrong side of a court room.

3.  It looks like the Plymouth Rock people are dead serious.  See the following link about licensing for the famous Hollywood sign to be used in Plymouth:  http://www.businesswire.com

4.  Massachusetts already had an established and thriving movie production infrastructure which appears to be getting larger.  This comes courtesy of the NYTimes (http://www.nytimes.com).  The article is mostly a lot of guesstimated numbers and anecdotal information, but it does at least show that Massachusetts can support movie production in a way that Rhode Island cannot.

5.  Plymouth Rock Studios has a kick ass website.  The Exit 2 Project doesn’t even know what the internet is.  

So is there really enough movie studio business in the Northeast for Hopkinton, Plymouth Rock and whatever other Johnny-come-lately decides to build in Connecticut?  You can have gas stations on every corner and no one complains.  We all need gas.  But how many movie studios do you need in New England?  And the last sentence of the NYTimes articles spells it out pretty clearly, movie producers are whores and will go to which ever location gives them the biggest bribe:

“It’s about the money,” Ms. Peri acknowledges. “If they can get 42 percent rebate in Michigan, they’ll just pack up and find a way to make Michigan look like Paris”

And eventually they will be getting 50 and 75% tax credits somewhere else (and god forbid rebates) and happy little Hopkinton will be left with a bankrupt movie studio that that amounts to another piece of blighted landscape.  How about we start thinking of some sustainable activities for once?  How about we choose NOT to jump on the bandwagon heading for a cliff.

Your Neighbor, Ishmael

Lessons from Connecticut

We could probably learn a lot of lessons from what we should and should not do from the successes and failures of our nearest neighbor, Connecticut. Although I am not sure we can yet learn anything from their experiences with movie-production tax credits, at least they have some data we might try and analyze.

Before I talk about the data, I feel it is necessary to point out that I really don’t like move-production tax credits. The reason for this is two fold. Firstly, it increases state debt/lost revenue. This is bad because this revenue is used to pay for schools, roads, police, healthcare and every other public service we take for granted. Without this tax revenue, we find ourselves in the current situation: no money in the state budget to pay for all the things we have come to expect and need. Lost your job? Too bad, no money for unemployment. Being robbed? Too bad, no money for police. Want to educate your teenager? Too bad, we closed URI, RIC and CCRI. You get the point. Now you can (and will) argue that tax credits bring jobs and increase local people’s business. This has yet to be seen but the small amount of revenue the average shmuck may earn from working on a TEMPORARY job with movie production is a joke. The money lost to pay for public services is significant. Let’s be honest, the people really making all the money from movie-production already have plenty of it.

The second reason I do not like these credits is because they are patently immoral. They are a legal bribe. I can’t go bribe a the zoning department to let me build in a wetland but the State can bribe a developer to come put in a shopping mall, big box, movie-studio, whatever. I have no problem with shopping malls, big boxes or movie studios. I like movies and cheap toasters. Really. I love to toast the crap out of things. But if you want to build any of these businesses, you should build them because the need is there, the location is good, the business model is sound and the financing exists. You should not build this stuff because you have nothing better to do with your time and will make lots of money in tax credits from the public. Yes, I realize that “everybody is doing it”. I know that every Town and every State has their own legalized bribery scheme in operation and if we don’t also have one, we lose out. And I know we would jump off a bridge if they did it too. We are stupid lemmings. Stupid, stupid, immoral lemmings. I know it but I don’t like it one bit.

Here’s the data. The New London Day, a true pillar of the journalistic arts, published a story last Sunday about movie-production credits in Connecticut entitled, “Enthusiasm, not evidence, backs up tax breaks for film producers”, by Ted Mann. Well, you can see where this is going. The data that is presented is that currently, $55 million in eligible movie-production dollars have been spent. Sadly, only $43 million stayed in Connecticut. Luckily, $20 million of new gross state product was produced. But at a 30% credit, the state actually incurred a debt of $16.5 million dollars (that piece of information is surprisingly lacking from the article). Effectively, private individuals/corporations in the state earned $43 million dollars but the state as a whole (the cop paying, garbage removing, road paving, healthcare providing part of the state) lost money. But somebody earned $43 million. Now you, reading this post: do you think it is remotely likely that you would have earned any of this money if you lived in Connecticut? Maybe? Here is a plausible scenario: suppose you owned a little restaurant where one of the movies was produced. Maybe you would have sold 100 more donuts. Wa-ho! Call your wife! It’s steaks tonight! And a week later, you would be no better off than before. Read Mr. Markham’s quote on my previous post and you further realize how ridiculously unlikely it is that there is much benefit for the locals. Remember when Richard Geer came to Rhode Island in February to shoot a movie? It was observed that the license plate on every single production vehicle was from OUT OF STATE! Mr. Markham seems justified in his concern that this is a losing proposition. Maybe Connecticut actually has a fully formed movie and television production infrastructure, it is apparent we do not. It is also apparent that any previous infrastructure that exists in Connecticut was developed without public tax credits. That’s called the impact of market forces, “see a need, fill a need” as a famous Disney character has been known to say. That same character did not say, “give out free money to get movie stars to come to our state”.

So what about the $20 million in new gross state product? That is a completely made up number. It is a guess, it is a fabrication. It has no basis in reality. It is the “enthusiasm” in Mr. Manns article. The figure could have easily been set at $10 million or $5 million or $150 million. However, $5 million doesn’t seem very substantial and no one would believe $150 million. $20 million is just a strategically appropriate number, designed to look good and believable.

So is there really any benefit to any of this? Is there any benefit to movie-production credits? Unless you own a company that rents movie trailers or stage lighting or camera cranes, probably not. Or unless selling 100 more donuts is going to set you up for life. This is just another example of large corporations making money at the expense of the public good. Large corporations getting larger while the state flounders. Yeah, yeah, yeah, I know you’re saying, “But Ishmael, Ronald Reagan says that money trickles down”. Well, Reagan’s dead, the country is a mess and all that has trickled down is the giant ball of rolling crap that speculators, banks and mortgage companies have so kindly delivered to us on a crap covered platter. There is plenty of the other kind of trickling going on in Providence. You know, evicted homeowners trickling urine into the streets because they don’t have a pot to piss in. How about they get a tax credit?

If you want to make a movie in Rhode Island, feel free to come and do it. We’re happy to have you. We’re nice, friendly New Englanders. But don’t steal from us while you’re at it. I am afraid to say that tax credits for movie-production amount to a ridiculously short-sighted flash-in-the-pan equivalent to corporate welfare. And you can take that to the bank (assuming they will finance your movie).

The only caveat here is that a movie studio (as opposed to a movie, which just films in the state for a few weeks) might actually bring some long term jobs and stability. But that depends on a lot of assumptions, including a sound business model, an actual need for services, some financing and a reputable developer. I have seen none of these when it comes to the fiasco over at Exit 2.

Your neighbor, Ishmael

Is the Hope Valley Movie Studio Dead? Let’s Hope So…

It looks like the movie studio may indeed be dead, or at least in the middle of it’s death throws.  The Rhode Island legislature has proposed capping the maximum allowable credit for movie productions in the state to $15 million.  For most productions, this is probably acceptable.  The movie studio is a substantially larger operation however, and is very upset by this fact.  They want a 20% tax credit.  Ok, lets do the math: 20% of $75 million (the projected cost of the studio) is what? $15 million! So why are they so upset?  Your guess is as good as mine but I have a feeling that something fishy is going on here and the legislature just called their bluff. Why does it matter if they get a flat $15 million or 20% of $75 million.  Isn’t that 6 of one, half dozen of the other?  I guess not…

Do you know what a tax credit is?  It amounts to a legal way of bribing someone to come to your state.  But it’s much worse than a tax break.  I can understand giving out a tax break here and there.  But a tax credit is resold by the company to make more money.  It’s not a “credit”, it’s more like actual cash.   It will actually increase the state budget by whatever amount is given.  It is not lost revenue for Little Rhody, it is more DEBT!

Some other unresolved issues surrounding the move studio:

1.     Originally they claimed it would employ 550 people.  Then the number jumped to 2,200.  Now Kennedy is saying “over 1000″?

2.     Originally they claimed they had gotten the rights to buy all the property surrounding the facility.  This turned out to be patently untrue, it looks  like only a handful of homeowners have agreed to sell, if necessary.  This all came out at a public meeting the company had with the local community.  It was rather embarrassing to watch them wiggle and fidget around the issue.

3.     The guy running this operation, Hal Katersky, has had considerable legal troubles in the past on similar operations, amounting to alleged  fraud.  See the following link: 

www.nlpc.org/view.asp?action=viewArticle&aid=2035  and this one: www.thecitizen.info/2007/04/abq_studios_own.html

4.     Oh wait, he tried the same thing in Philadelphia last year.  When he fails here, he’ll probably be moving on to Portland or Nashua.  See these links: 

www.bizjournals.com/philadelphia/stories/2007/08/06/daily16.html www.bizjournals.com/philadelphia/stories/2007/08/20/story2.html

5.     And it appears that Katersky engaged in alleged fraud in the state of Oklahoma, to such a degree that his partner is serving jail time and he has been forbidden from ever selling unregistered securities in the state of Oklahoma.  

See this link:  www.thecitizen.info/2007/04/albuquerque_stu.html

6.     Let no one miss the fact that the same site indicates he was named in over 30 lawsuits since the 1980’s in Los Angeles alone.  Oh, and he filed for bankruptcy in 1997.  Have you ever filed for bankruptcy?  I hear it’s not the best way to build a reputation for success…

Now, I can understand that being sued and losing money is sometimes the cost of buisness.  But Hal Katersky’s record should give us all pause.  Doesn’t this seem a bit fishy?  Doesn’t the Town Council find this a bit bizarre?  Why have Kennedy and Cordone publicly supported a man who appears to have had far more failures and legal troubles than successes? 

Neighbors, this is bad.  This will not turn out well for us and likely not for Hal Katersky, given his previously well documented track record.  Now Kennedy is all upset about the fact that,

“there’s not another project out there that would bring forth over 1,000 new jobs to the state of Rhode Island.” (Westerly Sun)

But wait, wasn’t that 2,200 jobs?

And here is some more food for thought, from local Westerly citizen George Markham.  He states in a Sun Letter to the Editor:  

“I find curious the proposed plan for a 200-room hotel. Film crews and actors are frequently paid a per diem stipend for room and board when filming on location. Could these hotel rooms be used for out-of-state union employees? The Rhode Island Film and Television Office is the agency that assists film production companies with coordinating activities when shooting in Rhode Island. Their Web site has a link to the film and television unions who are qualified to provide labor to production com panies filming in the Ocean State. Out of nine unions listed, none list a 401 area code; they are all out-of state.”

Yes, Mr. Markham, curious indeed.

So, does anyone else find this whole thing a little fishy?  Or is it just me?  I think we are being sold a bill of goods that isn’t worth the paper it’s printed on.  Perhaps our elected officials should pay more attention to the facts and less attention to whether or not Jennifer Anniston or Brad Pitt will be stopping in for a visit.  

If you want to see how this story turns out, rent a copy of Robert Preston in “The Music Man” or go buy a copy of the Simpson’s Season 4, you are looking for the episode entitled, “Marge vs. The Monorail”.  In either case, things won’t end as well for us as they did for Springfield or River City (and not even a giant donut will save us).

-Your Neighbor, Ishmael