Studio struggles after film incentive changes

PONTIAC (AP) -- A nearly year-old movie studio north of Detroit has defaulted on a $630,000 interest payment and could do so on another payment after failing to attract enough feature films. Raleigh Michigan Studios in Pontiac is hitting hard times under a state cap on film incentives, the Detroit Free Press reported recently. The studio was designed for seven medium-budget feature films each year and had projected 3,000 jobs, but only 15 to 20 people currently are employed at the facility. Michigan had one of the nation's most generous film incentive programs until Oct. 1, when annual spending on the program was capped at $25 million. The program previously was not capped and had given film studios a refundable credit of up to 42 percent on production expenses in the state. In early 2011, it became clear that the incentives originally approved under Democratic Gov. Jennifer Granholm would be scaled back under Republican Gov. Rick Snyder's administration. "The film incentives were passed and backed by strong bipartisan support, so with that as the background for the law, we did not anticipate the magnitude of the change," Raleigh chief financial officer Steven Lemberg wrote in an email to the Free Press. "There was no turning back with the studio as construction nearly was complete." Studio owners are lobbying Michigan lawmakers to have the incentives pushed up to $100 million, but Snyder has said he's not interested in taking the incentives more than $25 million. At Raleigh Michigan Studios, the last production, Walt Disney's prequel "Oz: The Great and Powerful," completed filming earlier this year. Another interest payment of $630,000 is due to studio bondholders on Aug. 1. If the studio can't make the payment, the State of Michigan Retirement Systems is obligated to cover it. The retirement systems invested in the $80 million project. Published: Wed, Mar 21, 2012