Producing in Paradise: The Real Cost of Filmmaking in Hawaii

What is discussed, and when

1. 0:00 – 10:00: Island Film Group, Act 221, Ricardo Galendees, University of Washington
2. 10:00 – 20:00: SB 32
3. 50:00 – 1:00:00: Hawaii Tourism Authority
4. 1:00:00 – 1:10:00: Act 221, SB1641
5. 1:10:00 – 1:20:00: Island Film Group
6. 1:20:00 – 1:26:57: Island Film Group, Soul Surfer

Notable quotes from "Producing in Paradise: The Real Cost of Filmmaking in Hawaii"

• Today I'm talking with Ricardo Galendees, co-founder of Island Film Group and a key figure in Hawaii's production scene. From his early career as an attorney, becoming a leader in local filmm. Rick brings a unique.

  about Island Film Group · at 0:07

• That was pretty crazy to do. But you were you graduated from UDub, University of Washington, and you got a law degree. Yes. Yeah. And so you were practicing law in Seattle. I…

  about University of Washington · at 2:21

• Came into it from the technology again from the high-tech side. but that was in the investment tax credit act 221 which allowed people to invest in high-tech you know ventures…

  about Act 221 · at 3:51

• On this podcast is I saw you give a great testimony at one of the hearings for SB 32 and that is kind of it's kind of an improvement or changes being made to our current tax incentive bill. Right. Correct. and one of those things in there.

  about SB 32 · at 18:10

• That they're paying for Hawaii tourism. besides the 30 million they give Hawaii Tourism Authority for a budget for marketing.

  about Hawaii Tourism Authority · at 52:33

• Moving into the end of this session for this bill. And there's other bills out there like SB1641, and I'm just mentioning it for the sake of mentioning it, where the state wants to create basically their own board to have a little bit, it.

  about SB1641 · at 1:03:42

• Our one of the biggest films we've done, maybe it was the biggest, was the movie Soul Surfer. That was 15 years ago. Oh yeah.

  about Soul Surfer · at 1:20:19

Who and what is mentioned in this episode?

People

• Ricardo Galendees — Person · 1 mention · first at 0:07
  Today I'm talking with Ricardo Galendees, co-founder of Island Film Group and a key figure in Hawaii's production scene. From his early career as an attorney, becoming a leader in.

Books & papers

• Soul Surfer — Book · 1 mention · first at 1:20:22
• Hawaii 5-0 — Book · 1 mention

Companies & orgs

• Island Film Group — Company · 9 mentions · first at 0:09
• DBED — Company · 2 mentions
• University of Washington — Company · 1 mention · first at 2:25
• Hawaii Tourism Authority — Company · 1 mention · first at 52:39

Concepts & topics

• Act 221 — Concept · 4 mentions · first at 3:56
• SB 32 — Concept · 1 mention · first at 18:14
• SB1641 — Concept · 1 mention · first at 1:03:47
• SB32 — Concept · 1 mention

Full transcript with timestamps

0:00 Aloha and welcome to the big picture where we dive into the people and the projects shaping Hawaii's film industry. Today I'm talking with Ricardo Galendees, co-founder of Island Film Group and a key figure in Hawaii's production scene. From his early career as an attorney, becoming a leader in local filmm. Rick brings a unique perspective. We talk about his journey, what inspires him, the challenges of producing in Hawaii, and how we can grow opportunities for local creatives. Let's get into it. Here's Ricardo

0:39 Galendez. So, today we have a amazing guest, Rick Galendez, who is the co-founder and producer at Island Film Group. Um he's also a member of producers um guild of America and a board member on Hif and maybe vice president. I think so right now Rick thank you so much for coming on man. Great. Yeah it's good to having you Rick. Rick Galendez is that that's sp that's Puerto Rican yeah Puerto Rican Spanish. My father was born in Puerto Rico. Okay. So, I am an island. Different island person, but just different island. Yeah, island for sure. And um when did you move here?

1:22 You're not from here. You moved here when? Moved here in 2001. 2001. And what what brought you all the way out here? Well, my mom lived on the big island. She lived in in North Kala. And so, we would visit her and then we had friends that lived here on Aahu. And we were living in Seattle at the time. And so we would visit a couple times a year, my wife and I, and we had three kids in Seattle. And every time we would go back home, my wife would cry. And literally on the plane to going home, she would cry. And so finally, um, after my daughter had graduated from high school in Seattle, she's like, "I think we should move."

1:58 And I'm like, "Okay." Hard to. So So we moved. And then our daughter ended up going to University of Hawaii. It's like, "Well, wait a minute. If we knew you were going to follow us, maybe we would have moved sooner. Yeah, exactly. So, we moved in 2001. Really just My wife was born and raised in Seattle and loved it here and so moved here without a job which, you know, in retrospect was that was pretty crazy to do. But you were you you graduated from UDub, University of Washington, and you you got a law degree. Yes. Yeah. And so you were practicing law in Seattle. I was worked for general counsel for a software company. So, I was more on the business side and that's what I'd hoped to do when we came here and then realized that oh, there's not that many in-house, you know, legal positions available. So, ended up joining a law firm here. Oh, interesting. So, um did you move straight to Big Island or you

2:50 No, I moved here. Yeah. No. Okay. And cuz your daughter was already going to uh at that time. Interesting. And and how did you like law? Did you enjoy being an attorney? I not really. That's why I mean I liked being in the business side of it. So working for the software company that was great because it was more business than law. I had attorneys that worked for me. So that was didn't have to do the the boring stuff. Um and so then came here and joined the law firm and um that was okay. And I worked in the corporate department and and a lot of my clients were high-tech clients.

3:27 Um, and that's how we got into film and TV with the investment tax credit that applied to high-tech companies but also applied to film and television. That was one of the first kind of tax credits. Uh, what year was that about the I don't I it must have it must have already been in place in 2001 2002 because I kind of came into it from the technology again from the high-tech side. Um but that was in the investment tax credit act 221 um which allowed people to invest in in high-tech uh you know ventures but also film and TV. And so one of my bit one of the partners at the law firm came to me and said hey you know Fox just called they have this TV series they want to do and they're interested in the tax credit. I was like okay. I mean, tax credit, tax credit. It didn't really matter to me what kind of business it was, but that's really kind of what Island Film Group started was starting to do the tax credit work for Fox and uh

4:29 they had a TV series called Northshore and then ABC had TV series called Lost. They were a client. Um Warner Brothers did a pilot called Rocky Point. And so we were doing the tax credit work and being the local attorneys for those uh those shows and those networks. Um, and so we did that from 2004 till about 2007. Raised a lot of money out of Hawaii for the networks. And in 2007, the other attorney, Roy Chu, who was a partner at the firm as well, he and I both left and opened up Island Film Group. So that was kind of, you know, I love Island Film Group.

5:06 Um, I'm a little biased. I've worked for you guys, uh, many of times. Uh, always great gigs. Um before we get into talking about Island Film Group and all its amazing resources you guys provide here on the islands, um can we can you explain to me a little bit of of how you were involved in the tax credits and these productions coming here? What what exactly um were you guys you guys were just kind of explaining to them how our local tax credits work and how how they can capitalize on those things? Um yes, that that was the probably the initial conversation with them. Um and then the next thing came into how you'd have to structure uh the businesses to to utilize a tax credit. The tax credit back then was an investment tax credit.

5:54 So it's different than the tax credit we have now. So what we have now is what's called a refundable tax credit. Meaning you you make your movie, you spend your money, and then the state gives you a tax credit equal to, you know, x% of whatever you spend. If you are a company that happens to have tax liability because you have other ventures and you have income tax that you owe the state, then that credit offsets the income tax. M um if you don't have tax liability or you have less tax liability than the tax credit, then the state actually writes you a check, right? So that's called a refundable credit. Um and that's what we have now. Back uh with act 221 was a non-refundable credit. You needed to find individuals with tax liability who needed the tax credit, right? And um you know, most most production companies don't have any tax liability, right?

6:51 We're we're set up just to make the movie. So if the movie cost $3 million, right, we get $3 million, we make the movie, we spend it, and then that's it. Because the the intellectual property, the copyright doesn't usually belong to the production company. So you would have to set up and structure investment LLC's to bring in investors who would then be allocated the credit. And so that's what we did as attorneys was help structure these investment LLC's in a way that um that then investors could come in and and usually local investors, right? Because they would need to have Hawaii income tax liability, right? So there were a lot of high netw worth individuals, uh, insurance companies, uh, folks like that, um, large, you know, large local companies that had millions of dollars of tax liability each year and they would invest in these movies and get these tax credits. And so that's what we

7:46 did as the attorney. So it's kind of like buying in if you're a local business is kind of um, buying in at a discount your tax credits. And so it really did kind of benefit anyone who really invested into those tax credit. Um yeah, it was it was a very big benefit. Um and the tax credit um had unlimited carry forward. So if you owed $1,000 in taxes, but you got $2,000 in tax credit, then you wouldn't have to pay, you know, any taxes the first year, but then your next year if you had another $1,000 of tax credit liability, you could apply the tax credit there.

8:22 So, it was it was a good credit. It was an important credit. It's not it wasn't as efficient as the credit we have now. Um, for various different reasons. A state it cost the state more money than the credit we have now. But it was very important. You know, prior to uh Act 221, we really, you know, I think Baywatch had been the last TV series. And there were little movies coming here and there, but nothing like 2004 when we had four pilots, three get picked up to series, two that ended up or, you know, at least lost ended up running for years and years and years.

9:06 And that really kind of, I think, was a a starting point of what had been up until now, the last 20 years of film and TV production in Hawaii, right? Um the only reason I was kind of asking those questions is because you see places like Atlanta still running they they don't have a cap on their um tax incentives and but they're still aren't they still running in the um refund or the selling of discounted tax credits to LLC's basically. So, that's the big difference is their state is not refunding through an incentive, but they're doing the tax um credits to other LLC's. And and I can't really I mean, I haven't really ever spoken to anybody who has been a proponent of the what we call nonrefundable tax credit. I think I think the idea might be that maybe to the average taxpayer this idea that oh you're going to get a credit and offset someone's tax liability is somehow better or less expensive than oh

10:11 I'm going to give that company a check. Mhm. But it is very from my perspective very inefficient because if I have a dollar of tax credit and you have a dollar of tax liability, you're not going to pay me a dollar. No. Right. Because you could just pay your taxes. That would be easier to do. So you're going to pay me, you know, 80 cents, 85 cents, something like that in order to receive the credit. Well, the state's still paying out a dollar, right? It's still a dollar tax credit that the state is going to basically not get that revenue. But as a production company, I'm only getting 85 cents, right? So now that credit is really worth 85% instead of the full 100% even though that's what the state's paying. So it's not as efficient. doesn't it's not as beneficial to productions, you know, and then it's created a whole cottage industry of tax credit brokers, right?

11:11 So, you know, because they're connecting the people that have the credits with the people that need the credits, which is all fine, but it's just I just don't, you know, never understood why we needed or why they needed to do it that way. Um, and then you run into situations. Um, we had a Hallmark movie that came here really last minute. We had just done two backto-back actually overlapping Hallmark movies and Hallmark said, "Hey, we've got a movie that was set in Puerto Rico, but we're having issues with the tax credit there. Can you guys do it in Hawaii?" And of course, we said, "Yes, that's great."

11:45 But one of the issues on Puerto Rico is that they have a very uh I think it's 40% and there's some limitations, but basically a 40% tax credit, but you need to sell the tax credit, right? And when there's not a lot of companies that have tax liability, I mean, there are some big companies in Puerto Rico, but when, you know, when there's not very many buyers, then they can push down the price they're willing to pay for the credit, which then makes it even%, right? Then less economical for the for the, you know, for Puerto Rico and for the production. I'm only getting 50 cents back on my dollar of tax credit. So anyway, yeah. No, that that's very interesting. Um I guess um I just wanted to get your opinion. So you you really like the current form of the tax credit refund system as opposed to the what goes on as far as brokerage and tax credits to other LLC's. You you you prefer this one better. The

12:48 structure we have now, I think it's the most efficient. Um it doesn't um one of the challenges we have is that you know this tax credit we have now um production tax credit is a way of reducing the cost of production. That's what we're doing. We're telling studios come to Hawaii and we will save you money. We will reduce the cost of producing in Hawaii. Well, that is that's very simple and very clean and and uh should be a a easy story to tell to to producers that have the money to make their movie. You know, if I've got $10 million to make my movie, but I can come to Hawaii and I get 22% back, great, because I could have spent my $10 million somewhere else, but I'm going to spend it here, okay? And I'm going to save money. If you're an independent film and you want to make a $3 million movie, but you don't have the $3 million, you know, maybe you have $2.5 million. Well, the $3 million, if you if

13:57 you spent $3 million and let's say you're going to get an average of 20% back, you'll get $600,000 back, which is that makes up that that shortfall. But then you have to figure out, okay, how can I bring investors in to give me the money now for the tax credit I'm going to get later? And unfortunately, the way our tax credit is structured makes that more difficult than it needs to be. Right? So convincing these guys to let you borrow or invest money and saying, "Hey, you will get your money back." And there's they're looking at, "Well, who's responsible of getting our money back and what does that process look like?" And that can be kind of scary. Well, and it's it's just the way.

14:38 Yes. And there's some fixes we could make to our current current tax credit uh rules, administrative rules that would make it easier to do that. And that's really, you know, we do production services for all level of productions, but we also do, you know, we also produce our own films or work with other independent filmmakers to actually produce their films. And that's the one part of our tax credit that if we could make some adjustments wouldn't cost the state any more money, but if we could make some adjustments in some of the administrative rules would allow us to basically I could come to you and say, well, you know, I've been paying you a lot of money as a grip on our show, so I know you got a lot of money to invest and hey, I need $100,000 to finish my movie and I've got $100,000 of tax credits that are going to come in and with with some changes to how the rules are, I could tell you I can I can

15:33 allocate those credits to you so you know that's where you're going to get your money back and you know you'd probably be like well that's okay I don't want to invest in a regular movie because I know they all lose money but if I know I'm going to get my tax credit money you know back I'll do it right so that's what we've been working on is trying to use this what we think is the most efficient tax credit model but make it also to be able to be used to raise money for film projects, not just save money for the studios. If that makes sense. It does make sense. I I I really doubt the bigger studios say, "Hey, we're saving million uh 2 million by these tax." I I have a feeling they just say now it's a $12 million budget. Well, good for us, right? Yeah. E either way it's a benefit and it's attracting projects here and um let's go back to the administrative things that we are working on. Is that

16:35 just really I mean is that a change that needs to happen in in a bill or is that things that can be worked out outside of a bill? It it depends. Um there are there's the statute, right? And that's what you know we try and amend. That's those are that's the state law. Usually um in state laws then there are um either provisions or um that look to the tax department to create rules and the rules are a separate set of their rules. They're kind of like laws. You got the statute for the tax credit. Then you've got the administrative rules that go along with that tax credit. And there's rule there's a process by how those rules are developed. and you have public comment and there's a whole thing to get these rules in place. So some of these things we want done can be that we want changed can be effectuated by a change in the rules. Okay. And so that's a much e theoretically could be an easier

17:34 process. Sure. Because once you know if the department of taxation and the administration says oh we think this is a good idea then you help them propose rules. They put the rules out for comment. people testify kind of like in the hearings they say I like this rule I don't like this rule and then ultimately you know if if it all lines up then the rules are passed and so now we have administrative rules that work in conjunction with the statute to effectuate what we would like to see. Absolutely. There are a lot of things going on right now. Um and and one of the reasons why I asked um for you to be on this podcast is I I saw you give a great testimony at one of the hearings for um SB 32 and that is kind of um it's kind of an improvement or changes being made to our current tax incentive um bill. Right. Correct. Um and and one of those things in there that maybe you was referring to because

18:36 you said this in your testimony as well, right? If we can kind of clean up some of that administrative process that'll help attract more investors and companies um to shoot their films out here. Um, what what is what is the most important thing on this bill for you personally as being someone so vested into our Hawaii industry and then even from a professional point of view of being a a producer? It's a good question. It's it's a little hard because as you know in this legislative process we start with bills that have all sorts of different things in it and then it gets narrowed down to these things and then it goes to a different committee and new things get added. So um sometimes when people say oh bill number such and such I have to think and think where are we now with that bill because it used to be this and now it's this. Um you know I would say the most important things that we have

19:30 to address well backing up. I don't think there's any I don't think anybody would argue with you know the the larger the tax credit is and the larger our cap is. We didn't used to have a cap on the program, but if you're going to have a cap as to the total credits you're going to do, um the more we have, the better, the more attractive, right? It's just like a sale. The bigger the sale, the more you're going to sell, right? And it's more than that. It's about being competitive. Unfortunately, now there's a huge market for these tax credits like Atlanta, New Mexico. I hate to, you know, mention international, you know, competition, but just in the natural arena, um, national arena, we got to compete against other people's tax incentives, caps, non-caps. And so, yeah. So, you know, we don't really, if we're going to be in this game, you know, if we're going to be in this industry, maybe that's a better word for

20:28 it, uh, we have to know what we're competing with. So, so you know, being able to say we have a a you know, increase the tax credit percentages, increase the cap. Those are all fundamentally the best thing we could do to attract more work. Now, at some point, you may start talking about the economics of it, and we can talk about that later, but you know, the more you the more you offer, the more you're going to receive. um the current bills that are in place um and some of the current issues. You know, we had a a as an attorney, I can understand it, but it is obviously unfortunate that um at the end of well, I think it was two or three years ago, uh the tax department took took a look at our entertainment company, payroll companies, entertainment payroll companies, and said, "Oh, you guys should have been collecting general excise tax on the entire invoice." Now, most of us would assume that wouldn't be the case, right?

21:26 If um I guess backing up, most productions don't hire crew people directly, right? You get your checks from entertainment partners or cast and crew. Y they're not the the production company you work for, but that's who you actually technically work for. So, we use payroll companies in this business because payroll is very complex thanks to the unions. Yeah. You know, we have a lot of different fringe benefits. We have different we have meal penalties. you've got all sorts of things that are very complex. So, we use these specialized companies so we don't have to create that every time. Um, so those companies had been working for years and and they would say, "Okay, here's they give us an invoice and said, "Here's all the grips we paid and it's $10,000 invoice and we have a 1% fee on it or 2% fee and pay the invoice." We're like, "Oh, great." And they would usually charge us general excise tax on

22:22 their fee, not on the $10,000 of wages that they paid through. Right. Really? Well, Department of Taxation came back and said, "Wait a minute. You're just another business. There is no exemption for you not to charge general excise tax on the actual payroll that you paid." Like, like it's their it's their revenue or something, right? So, the full $10,000 should be subject to general excise tax, right? It's accounting numbers to them, but to the state it's looking like they're they're treating it like revenue numbers that there it needs to be done. And and legally, when you read the statute, the Department of Taxation was correct. Like there was no exemption for these payroll companies.

23:04 But what does that do then? That adds 4.712% to your payroll cost. 4.7. Well, it's four and a half, but you pay GE on your GE. So, so, so they now would have to ask for their fee, their one or 2%, but then also be responsible for paying for for that 4 and a.5%. Right. And they would pass that on to production. So, that basically round numbers that just increased payroll costs in Hawaii by 5%. Do they do that anywhere else um that you know of or is that a general practice that payroll companies get taxed on? General practice where like um any other state basic is any other state basically taxing their payroll companies like that? Most states do not charge a sales tax or general excise tax on services. Hawaii is one of the few that does. So most places like in California, you may pay 10% sales tax, but that's only on physical items you buy, right?

24:07 you don't pay it on anything else, but in Hawaii you do. And so that's one of the things in the bill, the current bill we're trying to get change where, right, to provide an exemption for entertainment payroll companies to say, look, you don't have to, you know, you don't have to pay or you don't have to charge general excise tax on your invoice. And that, you know, that one thing that happened sent shock waves, you know, on the mainland to the studios because all they hear is what our payroll costs just went up by 5% if we go to Hawaii, right?

24:42 And notwithstanding, we're getting, you know, we're going to get our tax credit or 22% or 27% back. That's a huge increase. So that's that's you ask me what was the most important thing. That's probably the most important thing in this current bill is to rectify that situation. And that's been um we can say kind of solely on that um law alone is is making or breaking productions coming here. Would you would you say that? Yeah, I would. I mean, it's uh it it is a um it's just an additional cost. Now, you know what we have to remind and educate our legislators about? If you're a studio and you are budgeting out a project, you probably are asking your your folks who do budgets in three, four, five different locations. How much is it will cost if we go to Hawaii? How much if we stay in LA? How much if we go to Thailand? How much if we go to, you know, whatever your whatever your project needs. But you're going to be

25:48 doing these budget exercises and then you have to be able to say, okay, and what it's going to cost and what's the incentive and what's our net number and then you look at the net number and go, okay, creatively, where do we want to be? But we also need to, you know, pay attention to the bottom line. Absolutely. So when when you just throw an extra 5% onto onto your payroll costs and the person who's doing this high level budgeting goes well add 5% as you know the you know what we what the union rates are in Hawaii are the same as the union rates in California more or less basically anywhere in the US. So if you're adding 5% now our number our bottom line number is not going to look so good. Yeah. You're out of the competition basically. And and you know, we always have this perspective, you know, I'm biased, you know, I'm born and raised here. It's like, but it's Hawaii, you know, like

26:39 people want to come here because it's Hawaii. And and I truly believe that and I feel that people do want to come here. You know, the numbers have to make sense. I think that's what they have a hard time wrestling. And a lot of people think that'll always be the selling point, but where we are, especially in this day and age, right, it's like that percentage difference can be se saving them millions of dollars. And in our production world, we know everything just has a cost. And if you want it to look like Hawaii in a particular scene, if you're saving $10 million on this taxing, you could probably build something that could pass for it to the general population. So, that's where it gets really icky is that they're starting to um find kind of ways with their with their savings and money of staying in the mainland or going elsewhere how to kind of replicate what we we authentically bring. And I think

27:36 that's the, you know, that's the tough part about that. It's a tough part. I think there's also a misperception or misconception that that the people that make the decision where to shoot, they're not usually the people that come here, right? So, I mean, you know, this would we have a shoot and we have, you know, some people that are on our crew that aren't from here. I mean, they just have a perpetual smile on their face. They never want to leave. They're like, "What else do you have coming in?" I mean, once somebody works on set here, they realize this is the most amazing place ever to work. But none of those people are the people that are making the decisions to come here in the first place. Yeah. The people that are still stuck back. I mean, you know, the the studio execs that never get to leave the studio.

28:27 Yeah. Great. You you know, you guys want to go work in Hawaii, but I'm looking at these numbers. Yeah. You know, how much how much am I gonna say? Well, I'd like to give, you know, you a trip to Hawaii, so we'll go ahead and spend more money. That's, you know, that's not how it works. Yeah. And and and it's really tough because, you know, we're talking about these studio execs, wherever they're sitting. And it's tough because at the end of the day, it takes a lot of money to make a movie. You know, it takes a lot of money, let's just say, to make a movie, right? You know, anyone can make a movie. You can make a movie on your iPhone. you can, you know, have crappy sound or whatever. But, right, and they're all the they're all about the same length, right? They're all 90 minutes, maybe two hours, you know, sometimes two and a half, but you know, you're all making a 90 minute to, you know, 120 minute movie, but that movie

29:19 could cost a million dollars or it could cost $200 million. Yep. Yeah. And um the main point is is you know there's a lot of things um that we're working on to get ourselves competitive in in bringing work to Hawaii. And so that is the most important thing um to you as far as that get tax exemption and and what is in your opinion the likelihood of that happening in this session this current session? I think there's a good it is one of the most important thing unfortunately it's something that's you know it's not really improving it's filling the hole that we dug ourselves into right two years ago we weren't even worried about this and now we've that now this has become our big problem just to get back to where we were two years ago so on top of the other things that we've been fighting for right so I would say the next thing would be the proposal for the 5% increase on the tax credit with 80%

30:19 local hire 20 to 27% right so be it end up being 27% here and what 32% on the neighbor islands and that's pretty competitive like I know is Atlanta up to 40% or what is a competitive rate for incentive it I will say it's more competitive it's very difficult to compare tax credits apples to apples because there are a lot of things like we talked about refundability versus not um some have caps on above the line. Some don't even give you, you know, some states don't even have any tax credits to apply to above the line. So, it's a, you know, I'm sure there's somebody that's got this great spreadsheet matrix that they can, you know, they know what's going to qualify for. Um, what we've always said for our credit, which has been one of the selling points, has been this is a very easy credit. You know, we don't have many exclusions. Mhm. So you can take your budget and you can apply, you know, if you want to be conservative,

31:19 apply 20% instead of 22%. And you're going to be pretty close and you might even be pleasantly surprised that you qualify for more. Um, so adding another 5% definitely makes us more competitive and and really, you know, the the competitive thing also because you were talking about how people can build sets, people can rewrite scripts. Um, you know, if you're a screenwriter and you want to write, want to sell a script, where are you going to set your story? Um, in my bedroom with one window, right? But if you but if you're going to be outside and you're you're you're are you you know, there's only so many movies that are going to fit our location. They're going to be amazing movies, but there's, you know, you wouldn't sell this big, you know, inner city crime movie, uh, you know, whatever, and and say, "Oh, we're going to shoot it in Hawaii." Because it's like, well, why? I shoot it in New York

32:20 or Toronto or Vancouver, whatever. So, there's only going to be a certain number of projects that, you know, that re would reasonably be made here. And of those projects, you you also have to have an incentive that is is uh appreciated enough or or or is is enough that as a writer, you're going to be, you know, I'm going to write a movie set in a even just a tropical location. Forget saying it's Hawaii, but even a tropical location. So, you know, we are trying to encourage studios to shoot projects they already have. We're trying to have an incentive that's attractive enough that if you're a writer, you'll write a script. Exactly. Because you you want it shot here and that you think you have a decent chance that somebody would say, "Yeah, right. Let's do that." So, so you're saying, yeah, that can have even a bigger effect of creatives in general is is in the profession of writing and getting your thing sold. The

33:21 attempt to write something in Hawaii diminishes because you already know in the talent, it's going to be a hard thing to sell. The budget for a Hawaii movie is already very high, which is also sad because that kind of is killing people's creative process right from the get-go. Right. Right. Oh, that's interesting. So, I think the 5% increase would is great. Any increase is great. Um, devil's in the details. You know, when you say 5% local hire, what does that mean? Is that is that payroll? Is that number of of days worked? Right? What's local? How do you prove that? You know, we're going to make everybody sign, you know, and some states they do. You have to sign a residency affidavit. You know, I am a resident. and and there's a difference legally between resident and local. Just because you live here, you might not technically be a resident, but you do live here. So anyway, devil's in the

34:15 details, but if we can get a 5% increase, and then also details matter, too, because if it's too restrictive, it's kind of like when you look at a coupon and it says, "Oh, you get 50% off." And then you read the fine print, you're like, "Oh, I got to do this and I got to do this. I got to do this." So one of the challenges in in in making like a 5% increase a very specific like we want to increase you know we all want to increase local above the line we all want to increase uh local keys we all want that but if you make it a requirement of the 5% and somebody is trying to back at the studio is going to green lit greenlight a movie for next year they're like how do I know what else is going to be going on in Hawaii next here. Am I going to be able to meet whatever if we have very specific standards? Am I am I do I know I'm going to be able to meet those specific standards? If I don't know I'm

35:13 going to, then I can't really put that extra 5% in my budget because I may not be able to hit it. So then now that incentive isn't really an incentive anymore because they're only going to be looking at the 22% they know they can get and maybe they'll get the extra 5%. if you know and then it's like now it's a you know now it's one of those incentives that it's like well if I get it great if not I I didn't I wasn't counting on it and then the question is well then was it really an incentive right so so that's the problem with kind of defining kind of how we implement the 5% and I can I definitely see the argument um whether it's the state making the argument or maybe local workers or just general Hawaii a citizens of being clear with the incentives, being in the details as far as we need to make sure that we're we're hiring local people. It it's like I think there is that perception of bigger studios, Hollywood, let's just

36:16 say Hollywood taking advantage of Hawaii, you know, as much as we want to give, we want to be competitive, you know, like I know we don't want to be taken advantage of, you know, and that's I think um cuz it does sound easy, right? Like guys, let's just get this done, you know, not make it too complicated so that we can have work here. But, you know, you you open that door sometimes without enough detail and there'll be nothing against lawyers, there'll be lawyers that find find a way in, you know. So, that's kind of I think the the the voices you hear um wanting to have that real strict guidelines. Right.

36:57 Right. And and and what's important and that's fine. What's important is that there be enough people at the table so that so that the people who end up making those decisions or passing out the final bill are aware of what they're doing. Right? It's okay to say, "Look, uh we understand that this bill is going to be pretty prescriptive and you know what? Maybe maybe it's really not even going to be seen as an incentive by the big studios. Maybe what this is really going to do is help our smaller local films give, you know, and maybe they're already hiring over 80%. Mhm.

37:38 But, excuse me, but this is, you know, this is going to give them a bigger tax credit. Yes. So, it's going to be we're going to target the local films that maybe already are doing this as a way to give them more money. Yeah. And maybe it's not necessarily an incentive for the mainland production companies, but you need to be clear about that. Yeah. Because otherwise people go, "Well, wait a minute. I thought we were, you know, you know, I know you like working on our our small little local films, but you probably also like to get the check from the big movies that come in every now and then." Absolutely. So, absolutely.

38:09 It's that balance, right? Yeah. And I always try to tell people that it's like it it it's beneficial to have both, you know, and I know we spoke about on this podcast before, I've seen so many people gain such experience in these bigger shows, right? They have the budget for them. They're working very safely, meaning they have the budget to hire a full crew. They have the budget to bring in the proper equipment, not just jerryrigging something or going with a a piece of equipment that is less functional because it's cheaper. So, they're bringing in all the up-to-date equipment. people locally are getting their eyes on these new things, whether it's camera heads or cameras in general, right? And um and now we we as locals have experience in in in that field. Now when we have the opportunity to do short films, lower budget things, passion projects, we're bringing that same knowledge to your small little short

39:12 film. And that's great. like the the value you're going to get in your your lowbudget short film is going to be huge due to the constant work that these bigger studios bring in. So I I don't really like when people want to say, "Hey, we just need to go into more independent film and self- sustainability in Hawaii." I love that. That's great. But we cannot we cannot stop fighting for these bigger movies, these bigger productions to come down here because that's how we learn so much and they're the biggest injection of money into our economy comparatively to all the other projects. Yeah. No, I think that's important and I think that's something that again kind of, you know, we need both and and sometimes we see legislation that is like, you know, we want to do local and cultural films and and support our local filmmakers and absolutely, but that's not an industry.

40:14 that is a part of an industry that would be to your point supported by the training and the infrastructure and the and the equipment and and and all of that that comes with the larger productions. I think the other thing and I don't think we've I'm not sure I've talked to anybody about this before. Um Oh, perfect. Exclusive guys. Yes. Yes. Yeah. Um, as a production community in Hawaii, we are a little bit spoiled because certainly for the last 20 years and even before um it has been possible for people to work long enough this industry where they do they learn all this stuff and they do all the shows, big shows, little shows, in between shows, and they end up working their way up to be in the key positions. That's not normal.

41:17 That's not how anybody else anywhere else in the United States works their way up to be a key. The way they do it is to say, from wherever they live, I'm gonna move to LA. Why? I mean, nobody who lives in LA is from LA. I mean, not nobody, but you know, we talk about Hollywood. We talk about people coming from LA. Well, those people are probably coming from Chicago and, you know, Tennessee and but they moved to LA because that's where people were getting hired for projects and then they would go work all around the country, all around the world, and that's how they would get their experience to then be the keys that end up coming to Hawaii on shows. So, in a way, we've been very spoiled to think, well, I just want to stay here. Yes. Cuz most people in the film industry don't get to just work where they live. You're you're talking about me. I've been very spoiled and I've been one of those, you know, I I I

42:16 want to say few people, like you said, it it's no matter how many, you know, shows are out here, I we still only have the capacity to to handle so much. So it might be one, two, and you know, on the crazy years like three shows going on at at the same time. That's a lot of people getting a lot of hours of experience. But you're right. I feel like we we are we are in a fortunate position where we we got to stay here all these years and that's not how it works um in a lot of different places. And yeah, and I think I think you know I think certainly on the legislative side people they they sometimes it seems like they're annoyed.

43:03 Why you know, why why can't they just hire everybody here and why do they bring people in and we have people that have the skills to do this and and certainly from a skill level, not you know, I'm sure there's been for you, there's probably been shows that you've worked on where the key you're working for doesn't necessarily know any more than you know. Yeah. Right. So, I'm not saying that doesn't happen, but I think there's um I think there's just that misunderstanding that I I think it's a luxury for our industry to be like, hey, you can work in this industry. Everyone can work in this industry. You never have to leave Hawaii. We don't want anybody to leave Hawaii, which I'm not sure is a good thing because people do get a lot of great experience when they get picked up and go on another show. But if we want to say we want everyone to be able to stay at home with family working in Hawaii,

44:12 then we need to do the other half of it, which is do what we need to do to bring enough productions in to make that happen. Right. You can't have it both ways. No. But we need to basically have been creating a strong infrastructure that is sustainable over time, creating good workforce development in pre and postp production as well as just shooting things here. So we need to do workforce development, but as I like to say, you can't have workforce development if you don't have any work. So that's very true. So if if we want to have an industry that is local and people can stay here and do that, then on the other side we need to have the incentives and not just the monetary incentives. We've talked we have issues with facilities, right? We have we have we have all sorts of other issues that we could be working on to make this a better place for film and TV, but it's not going to be inexpensive. No. Right.

45:19 Yeah. If you just want to stay here and work and if the state and our and our, you know, our community wants people to just be able to stay here and work, then we need to do what we can do on this incentive side to make sure, you know, that we have uh projects that are in line like we absolutely need to go to Hawaii. We want to go to Hawaii. We can't shoot this month. We need to go next month. Like that would be the ultimate, right? That's like a restaurant if you have a line of people or you have a waiting list or whatever.

45:51 Mh. But that's going to mean the product or what we have to offer needs to be so great that people are waiting in line to come here. And right now we're not there, right? So if we don't increase our incentives, but we're also, you know, concerned that people need to leave or drop out of the industry, well, we need to bring those two things together. Yeah. Um, you know, it seems like there's going to be a jumping off point. There's, you know, and that's how it is in in every business or uh creation of of something. You can't wait for the numbers to be exactly so clear in profit profitability when especially when you're talking about creating jobs, creating a community, creating um people from here, livelihood, passion, right?

46:45 That's kind of the point of the state is not to make money, not to see what the return of investment is. It's to create jobs. It's to create an infrastructure. But it sounds like they're not really willing to take or there's certain people not willing to take this leap of faith and and they're not sold into this industry uh being a a real economic impact in Hawaii. Right. Yeah. I think that's I think that's fair. I think there's a lot of different reasons. You know, some people are just uh philosophically, you know, opposed to tax incentives. It distorts the market and we should be focusing on the things that we do better and and and you know, and no, there's not a budget in the world that ever is big enough for whatever, whether it's a film or your your your home your family budget or state budget. I mean, you always have more things to do, right? It's always a question of trade-offs. Um I think you

47:44 know as having done this now for you know 20 years um or more um you know some of the frustration is especially with our legislators um and even some community members you know is it that they don't understand the economic benefit or they understand the economic benefit but you know If if we can get the same level of production to come here, but we don't have to increase the credit, then we win, right? We may we make more money to spend somewhere else, right? And and I guess that's always going to be the balance, but um you know, there is a a DBED report that came out in October and November of last year. It was released in February, so I I don't know if I just didn't see it for all those months, but it was the the visitor um the impact of film and TV on the visitor industry. And they did this they surveyed 19,000 people. Um, bottom line is in 2022, the economic impact of film and TV on the visitor industry, not the

48:59 money that the studio spent here or that we spent locally, but on the visitor industry was a billion dollars, half a billion dollars, $500 million in wages and $121 million in tax revenue. Our tax credit program is 50 million. So even if every dollar that the film and TV companies came here netted zero, like we didn't get any e economic impact, which of course is silly, but let's say it it it zeroed out. There was still $121 million in tax revenue from film and TV. People that saw things on TV in the theaters came to Hawaii because of that. Yeah.

49:44 seems like we should be doing this all day every day. It does seem right. I mean, and and and I get it that well, okay, but if we only pay out 50 million in tax incentives, and again, not not thinking we've got any tax revenue from the actual productions and we got $121 million of revenue, that's $71 million of tax revenue we can spend somewhere else. I get it. I get that, you know, that's some a little bit of a leverage. But when we have an industry that's struggling, it seems a little weird to want that kind of leverage, right? To to make that much money, make 70 million off a $50 million investment. Like maybe maybe if we did a hundred million investment and and and the state made 20% on that, but that hundred million then created $2 billion worth of of travel revenue. Like that's the investment. And these are huge numbers.

50:40 These are huge numbers and it did seem like that um after those numbers were produced was oh yeah that's a big number but you know what we can't really correlate that exactly to the film industry right cuz it it took us a while just to fight to get that data was because for a long time they ignored completely the fact that the film industry here has an effect on tourism which which the state calls which it is the largest um economic industry in in Hawaii and everything and this in my opinion is catered to that industry, right? Tourism, tourism, this is our money. And when when tourism's down, everybody runs around saying, you know, we need to diversify, diversify. And they've been saying that for years though, right? And but then but then when things get good, it's like, well, kind of like all of us. It's human nature. Well, yeah, absolutely. But I I think it's unfair to ignore that fact or

51:40 don't um not give it the credibility it deserves because for us and and it's crazy that we're we're we have to explain it to for me because I think it's so apparent. You can ask anybody walking down the street like how much of an impact do you think movies and television make on people coming here for a vacation? Like I can tell you firsthand like when we're shooting Hawaii 5 in in Wy Ki like the crowds that are around there and like they tell me firsthand like this is our favorite show. This is why we we come here and to be to see it being shot in real life here. It's a dream come true for them, you know. So I know for a fact from real feedback that it has a huge impact. And the craziest thing for me is this is the if you look at it, it's probably the cheapest cheapest marketing that they're paying for for Hawaii tourism. I mean, besides the 30 million they give um you know, Hawaii Tourism

52:42 Authority for a budget for marketing. Yeah. It's like they're they're they have 30 million for a budget for marketing when we're doing it weekly on television shows that are that will play in syndication for years and years to come. People are still going to Jurassic um Kuoa Ranch for you know Jurassic Park tours. Yeah. Yeah. And that was that was one of the things they said in the in the survey too uh that they did you know in the analysis was that you know this was a snapshot of people the 19,000 people they surveyed who checked the boxes of why they came to Hawaii and some of that was you know one of the one of the choices is film or TV because of a program you saw. So this was analysis based on that but they said even in the survey you know but this isn't a static thing. It's not that someone saw something last month and came this month. This is accumulation of all of the things that people have seen over a

53:39 long period of time. And and that's the other thing that's so beautiful about this is, you know, you might see a movie, you know, they miss that movie three or four years ago and finally saved up enough money to come, but that still generated that. And and you know I think the frustration obviously you know we all have our perspective of the industry and how to make it better and how to make it work economically and obviously our livelihoods depend on it. So, we all have these vested interests, but and I guess it's it's not unlike anything else, but if everyone would at least accept and acknowledge these numbers, then I think we can have an honest conversation. And maybe I'm saying that because the conversation I feel would be pretty awkward for them to go, well, we just want to keep this money. But that's what it would have to be, right? It would have to be like, "Yeah, we know we get hundred plus

54:35 million dollars a year from tourism, but you know, we really want to spend that on something else, so we're going to keep your credit low." I mean, they'd have to reconcile those things, right? And right now, they just seem to ignore ignore the report. Yeah. Yeah. Yeah. Yeah. Um, I I do get emotional about that and um I I feel like that's a huge u part of what we can bring in diversifying our economy here in Hawaii. And and and not only diversify it, but we're we're actually adding to the the strongest part of our econ economy structure is is tourism. So, it's not even a competition with it. It's actually Yeah. It's kind of like in the middle, right? It's kind of like, look, we're not doing something totally different, like creating something totally brand new. So, there's pluses and minuses of that because it's still we're still then feeding into this thing that, you know, this industry that

55:39 goes up and down, but it's just kind of a side step, right? It's just stepping over here. And to your point, you know, maybe even think about thinking about like we're spending some marketing money that has a really good return, right? So, let's do that. It's kind of a different industry, but it helps our main industry. We should all be happy. Let's go make a movie. So, thank you for going through those things. I think that's a lot of things. Um, it's a great perspective, especially from you as, you know, more of the production side, producer side of things. Um, with your huge law, you know, background because I'm learning like I'm I'm just learning this now. It's I hate to call it, but it's a game. It's a kind of a game that you have to be on top of um in in legislation, you know, like I'm on that website every day looking the at the updated bills and what they're saying because to my surprise, just as a normal

56:36 guy, there are things, you know, getting put in there that I used to support this bill last week, but this week um that that might have changed um because these certain things um placed in there And I I feel like that's kind of what happened on SB32 was the language being added added in about a a sunset date now on our our our tax incentives in general. So instead of us fighting to improve these tax incentives that we've been fighting for all these years, um they're saying, "Oh yeah, I like these amendments of maybe, you know, helping improve um how this tax credit can work. We'll we'll maybe give you those things if we can kind of get on here that it goes away totally in five or six years." So now we're like, "Oh, no." like that's that's not what this bill was created for. And now we're heading to the edge of a cliff, you know, and that's a that's a scary thing. Yeah. And and it's just a

57:42 misunderstanding of uh you know that I guess there are there obviously are tax incentives that that that governments use to, you know, jumpstart something, jumpstart this this sector of the economy or this industry. and we're going to give these aggressive tax incentives to build some factories and and then we're going to back off. And that's been a refrain from a lot of folks in the legislature. I mean, going down there for 20 years and every year someone saying, "How much longer do we need to do this?" It's like, well, I guess as long as everyone else is doing it if we want to be in this industry.

58:18 But to just kind of, you know, not look anywhere else and go, gosh, you know, we've been helping you guys for a long time. can't you, you know, kind of get it together, right? Isn't really the right approach. Yeah. And and yeah, and in all fairness, it it is a tough situation to navigate. Um, you know, we have a ton of things going on as a state that we need to address. You know, we had the Lahina fires. We we have homelessness. We have education that needs to be improved. And so a lot of times when it they look at it as this is entertainment, you know, how important it is, it it probably does fall from pri um the list of priorities that they have. And and I'm I'm sure everyone, you know, even at the hearings and and speaking to different politicians, there's a general support for the film industry. you know, we we've had politicians, kids on set in scenes and they're there and they love it, you

59:20 know, and or they're in scenes themselves, right? And they love the film industry, you know. Um so I I truly and this is my personal belief is everyone is is rooting for us. They want us to um have the film industry here. They want movies to they want our stories to be told accurately over time. you know, they don't want us to be taken advantage of from outside entities. I I do believe that. Um do I also believe that it it's a little bit of um you know maybe mis mismanagement or um lack of industry insights that that hold us back from having a success successful incentive plan to build infrastructure here. I think it's a little bit of that too and and really I love hearing the different perspectives and I I think that's one of the issues of what we have as an industry culture is everyone has their own perspective. I I've spoke about this before on here.

1:00:28 It's like everyone has their own perspective. Everyone everyone only sees the picture from their point of view, you know, and so we got to get together. We got to discuss what are the you know strengths and weaknesses in in everybody's um sector whether you're a union member a worker a actor a producer pre post you know all of it you know um I think everybody needs to come to the table and and be able to have those discussions and um I think it's slowly getting there. H how have you seen that process? I'm sure 20 years ago there was there was probably less people around the table willing to have the discussion. Or was it better?

1:01:19 Um I think it was better only because it was um it was more novel. I mean and there was a there was a real push. I mean I mean the investment tax or act 221 was a huge endeavor and you know and and was it was the state trying to push for tech companies and you know film and TV and it was a big was a big lift right it was a really big commitment to those things and so I think it was a little easier to talk about the successes and you know why we're doing what we're doing and not that there weren't critics and some of them you was a valid criticism of of the program, but um you know I think I think there were more people willing to swing for the fences, right? And and that included the legislators and it was you know it was very clear which ones were on board and which ones weren't, but there were more that were on board. So that was you know it's easy to root for the winning team, right? Yes. And and I think over time,

1:02:23 you know, um I think over time you end up being a little bit of victim of your own success, right? We were so spoiled with with the with the all the ABC shows and then the CBS shows and I mean, you know, there are people in this industry that never have never known what it's like not to be working. Yes. Or, you know, not to be able to just say, "Yeah, I don't want to take that job. Like, I want to go do something else, but I'm not concerned that I'm not going to be able to have a job when I get back." Um that was because you had 20 years that was kicked off with this great enthusiasm for trying to diversify our economy. And I think again I think we were kind of a victim of our own success because pretty soon people are like well there's always a TV series here or two and there's always movies coming in and do we really need to do anymore like you know we can focus on other things and as you pointed out there's a lot of

1:03:20 other things to pay attention to. Yeah. Right. So, well, we are currently um waiting for this bill to to pass or not pass or and I just wanted to um hear your opinion on on what can be the best outcome uh moving into the end of this session for for this bill. And you know, there's other bills out there like SB1641, and I'm just mentioning it for the sake of mentioning it, where um the the the state wants to create basically their own board to have a little bit, it sounds like a little bit more control and um uh a a group that can can kind of form more of a path, a clearer path forward for our industry here. Um, that one is has a lot of traction as well.

1:04:17 And I just wanted to get your opinion on on what do you think about because that would basically are they saying they want to replace the the current film commission with this new board? I think so. Mhm. Um it it it I think would replace the film office um and and would then would formally kind of bring together um because there's two different versions, right? There's two different uh bills. I think 732 had a film commission segment to it. There's a film fun film fun section, right? But it also it also had oversight. Okay. So it was Yeah. Um, so that got dropped out of 732. Uh, the other bill, um, does have this commission that has folks from the industry, um, you know, whether they're producers and I think all people from nonprofits associated with film and TV and then county film commissioners, but only one at a time to serve a two-year term. Um, and it it, you know, it seems like a lot to me. It seems like

1:05:25 it seems like a lot to me when when we really have some fundamental and basic issues, you know, that that we need to work on. We need to work on our incentive. We need to work on infrastructure. Um, and you know, the the there is a every year um and there is this idea that somebody comes up with that didn't sound very nice. Um there's an idea that hey wait a minute you know we're giving 22% you know shouldn't we shouldn't the state be investors in these movies you know if we're going to give 22% we should own 22% of the movie we should be co-producers we should be co-producers or something like that and we can try that I don't think Apple's ever going to let you invest in one of their TV series or any of the networks it's just this is not how things work And and this is very flip, but you know, it's kind of, you know, I'm not sure we want to invest in any movie that would take our investment.

1:06:34 Yeah. Yeah. I mean, and and that's that's obviously, you know, meant to be a joke, but the, you know, if if our tax incentive is is designed to reduce the cost, then saying, "Hey, we'll reduce your cost by investing in your movie," really isn't reducing your cost. Yeah. That's just that's just I mean it just makes sense. If you have five movies on the table and you need to give incentives to any of these five movies, I think I would give money to the one I'm getting talent money in in it. And that's that's just it is how it it's written. You know, I have it right here.

1:07:10 And and that's part of kind of when you look at it, it's like in in a lot of these bills, right? We we talked about it. you read it and in plain view it's like, "Yeah, this is great." Like what they're setting up, I I hear it. You know, they're trying to develop something that we can have long-term infrastructure being built, workforce training, like this thing has it all, you know, and then and then but by the end of it of these other lines in there, you're you're starting to look as like that that makes things a lot more complicated. And this bill overall is now seeming to be um more of a more of a blockade to what we really need. Yeah.

1:07:52 And and you know developing this um Hawaii Film Authority is what they're calling it. Um you know it's chaired by um DBET and they have you know a CEO of Hawaiian um office of Hawaiian Affairs which is great. They have the cultural um influence of what is good or not. Um, they have, you know, the board of land and natural resources, someone from the department of education, someone from University of Hawaii, someone from the county film, uh, there's one member from a county film office rotating every two years. So, that person is not consistent. That person would be, and we have more than, you know, we have many counties, so, you know, rotating that is kind of weird.

1:08:43 um you know, and then one member nominated by the president of the Senate, one member nominated by the Speaker of the House, um two members representing labor unions, which I can tell you off the top, we have three labor unions that are very critical to our industry. So, that sounds like it's going to be uh rotating representation from that. and then two members from the film production industry appointed by the governor uh from nominees provided by film related organizations. So to me I really only see four seats on there that have input um that have industry experience and knowledge into the input of the the business of film making if if that's what what they want to create. And that's just my opinion that's just kind of how I I see things. I see it as taking on something that is very complicated in an industry that they very are not really familiar with. So yeah. Well, and and it would, you know,

1:09:47 to your point, it would all be in the execution, right? You can read, you've probably read some amazing scripts for films and then you see the film as it's made and you're like, "Oh, that wasn't what I had in my head at all." Right? So kind of like these bills like they may look really good on paper and if they all worked as everybody you know collectively thinks they should work it probably create a benefit. Um you know one of the things that you know that is a challenge as as as a producer too is that we have a lot of different stakeholders in what we do. Um, and we need to have input from the stakeholders. Again, my perspective as a producer, we don't have a lot of stakeholders that are directly involved in bringing productions here. Island Film Group's been a IIA term signatory since it started. every project we do is under the the IIA agreement.

1:11:00 Um, but I've never had that the the fact that we have that agreement or the fact that we have great crew people has never brought a project to Hawaii. It's a necessary component. And I absolutely go out and tell everybody that I can when we're out talking to people about Hawaii. We've got the best crew in the world. And I'd say one of the things that we talked about earlier, I they don't travel. They don't. So they're So the same person that works on your Hallmark movie is going to go work on your $200 million movie is going to go work on your TV series. They have amazing experience. We've got a mixed local, so they really have amazing experience. So I pitch that as a benefit, but that is not what is going to bring a project here. So it's absolutely required that we have good crew. It's absolutely required that we have good equipment. But if we don't have uh incentives and a community that is going

1:11:59 to attract the work, all this doesn't matter. So, um I hear I'm not sure I'm not sure what I'm trying to say other than I hear what you're saying and and that is a huge point and and number one is coming from you who again I've actually worked for many times and see the crews that are being put together where there's commercials, short films, movies, feature films, it's all local people, you know, and and like you said, you're probably I don't know if there's any other production company that has made that commitment basically from inception of of signing with the union and saying, "Hey, we're committed to our projects being local hired people." So, this is coming from someone I know for sure has has always rooted for our local workers. But I hear what you're saying is is that no matter how strong our workers are, no matter how many directors, actors love us because they do when they come here, they love

1:13:05 our Aloha spirit. They love how we work. We work very hard. We can we can do every job right at a at a high level. Um but unfortunately we're not responsible for bringing the jobs here or getting the jobs here. Now having said that, who is is supposed to be bringing jobs here? Like when when when we say bringing jobs here, is it someone at the state calling up um movie companies saying, "Hey, so what you guys got on the slate?" Like is it is there anything is is that someone's responsibility? Is that the film commissioner's responsibility to go out and sell Hawaii as a filmm?

1:13:47 I think the answer should be yes. Mhm. I mean, I guess the answer is yes. I don't know. You know, we used to joke mainly because we were bragging, but um that you know, prior to co Island Film Group, we go to the American Film Market, we'd go to Sundance, we'd go to Toronto, we'd go to Focus, which is a a trade uh film and TV trade show in London. Um we are uh members of AICP, the uh association for commercial producers. Uh we go to the the show the the show in New York. So we were out there. We were we had a bigger travel and marketing budget than the state film office and we are one company. Now obviously we're out there promoting ourselves. Yes. But part of promoting ourselves is promoting Hawaii because we can't just say, "Hey, we're great." You have to say, "Well, we've got great resources. We've got great crew. got great incentives. So, we were out doing the promotion, more promotion

1:14:45 for the state than most of the other uh county commissioners and film commissioners had the opportunity to do and nothing against them, but they did not have the budget to go do that. And I think part of it was kind of this whole well people are going to come to us and whatever. So, yes, we our our state and county commissioners do go out and promote Hawaii as much as they can. I think they should be given a bigger budget to do that. Um and then we have to have the incentives and the infrastructure un you know clear and understandable and stable so that we as producers can when folks call us about a project or we have a project or we reach out we see in the trades someone's got some project set in a tropical location and we'll we'll send him an email say hey have you thought about Hawaii and most people are like oh either I haven't thought about about it or I've heard it's really expensive or

1:15:46 I've heard the unions are really tough and you know we have to go through and and you know correct all of those those notions but it really you know it's the state and counties and its producers and and when I say state you know that involves a tax incentive but we we are the people that we either you know talk to other producers or producers come to us and say how can we make a movie in Hawaii and So all of our incentives and all of our promotion have to be geared towards, you know, getting them in the store, right? Once you're in the store, they're happy customers. Yeah. But we can have the best store in the world and if no one ever comes in, we're not going to sell anything. Absolutely. So, um, so I I can't tell you how much that I understand the frustration. Look, if if if crew is not making money, we're not making money, right? Because the only thing we do is make projects that require crew. So if crew aren't working,

1:16:44 Island Film Group isn't working. So we are obviously part we're all on the same team, but Island Film Group is going to be the one in our world that's going to bring the job that's going to be able to hire the crew. The crew are not going to be able to in most cases it's happened bring a job to us. Yep. So I think it's, you know, I I think it's important that um we have these conversations. Thank you for doing this. Um that we understand that it is kind of this pyramid, right? That it's supported absolutely by our crew and our infrastructure and how do we then at the top of the pyramid get people to say, "Yes, I want to come to Hawaii." Yep. And I love that. And I love what you guys have going at Island Film Group. You took me a um uh you gave me a tour of the spot.

1:17:40 Uh haven't been there in a while. I I'm always on the HMI side loading up trucks and getting my gear. Love HMI as a rental house here. One of the biggest, if not the biggest local rental house here in Hawaii. and and you you could say you're probably one of the biggest production companies, if not the the biggest here as far as experience and the capacity to do films. Like you guys have now a good amount of square footage as a studio. You took me up to your editing room where you can do full postp production things. You have production offices. Um what would it take for someone to get a project with you? say if someone has a has a script, where do where do they start when it comes to your company and the resources you provide here in Hawaii? That's a good question.

1:18:36 Um, you know, I think the challenge and the the frustration that I feel also as a producer is, you know, fortunately or unfortunately, we don't have a shortage of great ideas or great scripts or great ideas for scripts. you know, it's it's it's absolutely critical that we have people that have ideas and want to put things together and write scripts and that's the only way things are, you know, movie is never going to get made without a script. Um, but you know, the biggest challenge to any project ever, I don't care what, is financing. So, get your budget right before you, you know, and it's it's it's like there's a there's an old comedy bit where the comedian comes out and goes, "Okay, how to be a millionaire. First, get a million dollars. And it's kind of like that's kind of like, you know, how to how to be a producer, how to get your film made. First, get a million dollars.

1:19:34 It it is it is that part of it, the fundraising part of it is so challenging. And the truth is, it's really challenging because I don't know, I'll make up a percentage, but it's 95%. Let's say 95% of films do not make money. They do not make money for their investors. And it's kind of like buying lottery tickets, right? The only reason we have lottery tickets is some people make money. Yeah, there could be one winner, right? There's going to be there's going to be a winner, but most of you are not going to win. And that's unfortunately true about film and TV production, especially independent films. It is so terribly um challenging to actually uh make money from a film.

1:20:19 Our one of the biggest films we've done, maybe it was the biggest, was the movie Soul Surfer. That was 15 years ago. Oh yeah. And that is kind of the classic story of we started out and I think it was a $9 million budget. It's going to be this, you know, relatively small independent, I mean 9 million is a lot of money, you know, faith-based film and then and Sony was going to distribute it on their, you know, to, I don't know, 500 theaters. And then they saw the script and they said, you know, if you get Dennis Quaid and you get Helen Hunt and if you do this, we'll put it on 3,000 screens. I think that was it. It's only going to cost you, you know, another $10 million. We had investors like, "Okay, I'll put up the money." Right? So the movie gets bigger and bigger and bigger.

1:21:08 It's like, "Oh, that's great." than like, okay, we're going to put it in the movie in the theaters and we're going to spend $28 million marketing it, which is normal, right? Yeah. But it's like, okay, so so our investors that invested $19 million, now the studio is going to spend $28 million marketing. Well, and they want their money first, right? Well, and that's going to be put the movie in the theaters. The theaters keep about half. So, the movie is going to have to do what is that $56 million uh just to pay back the marketing.

1:21:44 Forget about interest and all that which they do charge. And it was just like every level was like uh more money, more possibility of not making your money back. Yes. Right. And and that was a movie that was on a successful trajectory. you know, you can't make, you know, I mean, this is before Netflix and streaming, but, you know, you had to go theatrical, and that was the only way you had a possibility of making your money back. But to do that, someone had to put up $28 million. Mhm. So, this was the best possible scenario, but we were getting further and further, less likely, you know, behind, less likely to make money. Now, ultimately, we did. Ultimately, the movie did very well. It took, I don't know, five, seven years before we got our money back. Yeah. But we did. And that's rare. So often times you make a movie and you finally make the movie and then it's like Yeah. And and that's now what?

1:22:44 Yeah. And that's that's a very honest perspective and and really what people don't understand is when it comes to film making making particularly movies, right? cuz there's the other avenues where marketing obviously it's a money generating uh media you know but movies in particular where people feel passionate about telling a particular story people got to buy into it a lot of times it's not going to be successful and that's a good thing for filmmakers to kind of keep in mind but um you you guys at Island Film Group do everything from commercials to feature films to what what kind of things do you guys really look to produce or like to produce? Yeah, I think that's it. I mean, earlier when you said, look, there's there's a lot of really great production companies here that have been around longer than Island Film Group doing what they do. I think I think we're different in that we do a little

1:23:42 bit of everything. Okay. Right. So, we started off um you know, our first movie was Princess Kulani. I think you said you worked on that. I did. It was one of my first movies I worked on. rigging electric, pulling cable at um our start times would be like 1:00 a.m. Yeah. Great. Great. Uh way to get initiated. So that so we started, you know, we started in feature films and then we did some TV series stuff um Beyond the Break. Oh yeah. Um so that was one of the projects that that we co-produced. Um, and then we started doing some commercial work and you know, really for us to to be able to have a permanent facility and have five full-time employees and that, you know, we needed to Yeah. You know, do these various things, right? And so, um, yeah, I tell people we do a little bit of everything.

1:24:35 We, you know, we, um, we don't do a lot of local commercials. First Hawaiian Bank is a local commercial that we do we've done for a number of years, but that's one of those things. It's a mainland agency. I mean, it's all Yeah, it's a local customer, but um but you know, the the larger budget commercials is what we kind of focus on on that side. We've done some music videos. We did a Katy Perry music video and Holly music video. And so really just about anything that comes comes across our desk and people can reach out to you if they have any questions, right? Like, hey, is this project something you guys would take on? What do you think about it? What are the other resources? You know, you give so freely in your um knowledge and your wisdom in the industry and the resource you provide here for Hawaii to me is a huge one. I appreciate having you guys.

1:25:28 I I appreciate having you on today. We could probably talk for hours, you and I, Rick. And I hope I think we have I think we have and I think we're going to have to wrap it this up and and I hope this is not the last time, you know. Um I'm hoping I can have you on again somewhere down the line in the future where our industry looks a lot healthier and and there's we won't have time to talk. Yeah, we we totally won't. Um but yeah, I just want to thank you, Rick, for having you on. You've been an amazing guest. Thank you very much and thank you for doing this because I think it is important and you know we we we we all get frustrated that you know we can't get information out or people don't understand and and you know we can stay frustrated like that but really the solution is to you know have shows like this. So, thank you for putting it on for and for coming on to shows like this so that we can at least share our

1:26:23 perspective and people may agree and they may not, but at least they'll understand a different perspective. Absolutely. It's truly my pleasure. Thank you, Rick. Thank you. Have a great day. You too.

Questions about this episode

What is discussed in "Producing in Paradise: The Real Cost of Filmmaking in Hawaii"?

In order: 0:00 Island Film Group, Act 221, Ricardo Galendees, University of Washington; 10:00 SB 32; 50:00 Hawaii Tourism Authority; 1:00:00 Act 221, SB1641; 1:10:00 Island Film Group; 1:20:00 Island Film Group, Soul Surfer.

What is mentioned in this The Big Picture episode?

11 people, works and ideas are mentioned, including Island Film Group, Act 221, DBED, Ricardo Galendees, University of Washington, SB 32. Each one on this page links to its own page with every episode that mentions it.

How long is "Producing in Paradise: The Real Cost of Filmmaking in Hawaii"?

The episode runs 1 h 27 min; the transcript is about 14,856 words in 96 timestamped sections.

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