NOW ARRIVING DAILY : THE ECONOMIC OUTPUT , JOBS , WAGES , AND CITY TAX REVENUE ATTRIBUTABLE TO LAWA’ S FILM -FRIENDLY POLICY December 2006 GREGORY FREEMAN MICHAEL MONTOYA NANCY SIDHU LAWA Film-Friendly Policy EXECUTIVE SUMMARY In this report, the LAEDC assesses the economic impact of Los Angeles World Airports’ (LAWA) post-9/11 film-friendly policy. The LAEDC estimated the total jobs, wages, and economic output generated by film crews working on location at LAWA properties during the four years, 2002 to 2005. The LAEDC also estimated the City of Los Angeles’ share of sales tax revenue attributable to the film-related activity. Total Economic Output, Employment, Wages and City Tax Revenue Generated by Filming on LAWA Property, 2002-2005 (Millions of Dollars, Number of Jobs) Economic Output $590 Employment 4,800 Wages $280 City of Los Angeles Sales Tax Revenue $1 Source: U.S. Department of Commerce, US Bureau of the Census; LAEDC Filming on LAWA property generated $590 million in total economic output in Los Angeles County during the four year period, 2002-2005. Economic output, also called business revenues, is the increase in gross receipts realized by all firms as a result of direct and indirect economic activity associated with the initial production spending at LAWA. Shoots on LAWA property also helped sustain 4,800 full-time equivalent jobs. This is an understatement of the actual number of workers, because many of them work part time. The 4,800 workers collectively earned $280 million in wages between 2002 and 2005. The City of Los Angeles collected $960 thousand in sales tax revenue on production company spending, as well as the spending of the direct and indirect workers. Missing from the tax figure are additional taxes such as business license taxes and city parking taxes that were also generated by filming activity on LAWA property. The economic output, jobs, wages and taxes reported in this study are attributable only to the portion of the motion picture production activity that took place on LAWA property . All of the productions involved additional expenditures (at a minimum for post-production work, such as sound and video editing) beyond the amount spent at LAWA. For many productions, particularly for movies or television shows where an airport scene was merely one among many, the off-airport expenditures – and related economic impacts – far exceeded those related to the activity on LAWA property. The LAWA film-friendly policy matters. If the filming portion of a production leaves the area, potentially everything from pre- to post-production may leave as well. Conversely, the opposite may also be true. The “LAX” series was filmed in Los Angeles and not Dallas because of the ease and convenience of location access at LAWA property. With other states and countries offering significant incentives aimed at luring productions away from Los Angeles, easy access to shooting locations at LAWA make shooting in Los Angeles easier, and the decision to leave L.A. that much harder. To the extent that it helps keeps films in L.A., the contributions of LAWA’s film-friendly policy are almost certainly orders of magnitude larger than reported here. LAEDC Consulting Practice LAWA Film-Friendly Policy INTRODUCTION Los Angeles World Airports (LAWA), the City of Los Angeles proprietary department responsible for running the Los Angeles, Ontario, Palmdale and Van Nuys airports, has been an important – if unheralded – contributor to the health of the motion picture production industry ∗ in Southern California. Each mayor since the Bradley administration has encouraged a film-friendly policy at LAWA. This practice has seen the Department of Airports cooperate with thousands of film, television, and commercial productions, providing shooting locations on LAWA-controlled property on a cost-recovery basis. In the immediate aftermath of the September 2001 terrorist attacks, LAWA and every other airport authority in the nation suspended access to airport property for motion picture production. The Los Angeles City Council, concerned about the impact on the local film industry, directed LAWA to tackle any security concerns and return to its film-friendly policy as soon as possible. New procedures were put into place and filming resumed in January 2002. LAWA hired the Los Angeles County Economic Development Corporation to assess the economic impact of its post-9/11 film-friendly policy. The LAEDC estimated the total jobs, wages, and economic output generated by film crews working on location at LAWA properties during the four years, 2002 to 2005. The LAEDC also estimated the City of Los Angeles’ share of sales tax revenue attributable to the film-related activity. ∗ For this report, motion picture production includes the making of films, television programs, and commercials. LAEDC Consulting Practice 1 December 2006 LAWA Film-Friendly Policy BACKGROUND Shakespeare observed that “All the world’s a stage, and all the men and women merely players,” a metaphor that Los Angeles, with its ubiquitous film crews, seems to have taken literally. With L.A. serving as the backdrop for so many television shows, movies, and commercials, city sites from the beaches to downtown bridges regularly serve as shooting locations. The scale of this activity is described in Table 1, which presents the number of on-location filming days in Los Angeles by types of production, 2002-2005. Table 1 Location Production Days in Los Angeles 2002 2003 2004 2005 Features 8,024 7,329 8,707 9,518 Television 12,870 14,395 18,257 18,740 Commercials 5,615 5,701 6,703 6,983 Music Videos 1,410 1,208 1,273 1,358 Student Films 4,701 4,988 5,379 3,032 Miscellaneous 4,349 2,668 3,504 3,250 TOTAL 36,969 36,289 43,823 42,881 Source: FilmL.A., Inc. The numbers, compiled by FilmL.A., Inc., are based on permits issued for location filming in the City of Los Angeles, unincorporated Los Angeles County, the Cities of West Hollywood, Diamond Bar, South Gate, the Angeles National Forest, and the Los Angeles Unified School District. With 42,881 location days in 2005, Los Angeles averages 117 productions filming daily . The region’s airports are also part of the set. Filming takes place on LAWA properties at LAX, Ontario, Van Nuys and Palmdale airports daily except during the week between Christmas and New Year’s Day. At any given moment, there are as many as six productions shooting simultaneously. Productions seek out locations at LAWA to shoot curbside, terminal, and airfield scenes. Less obviously, they also take advantage of LAWA-controlled properties such as the sand dunes adjacent to LAX and the empty homes in Manchester Square. Major studio, independent, and student films; television shows; commercials; music videos; print ad photo shoots; and airline training films are all shot on location at LAWA properties each year. Figure 1 (on the next page) provides details for all motion picture projects shot on location at LAWA properties during the four years, 2002-2005. LAEDC Consulting Practice 2 December 2006 LAWA Film-Friendly Policy Figure 1 Number of Productions Filming on LAWA Property, 2002-2005 2005 50.5% 9.9% 25.3% 14.3% 182 2004 53.7% 5.5% 16.5% 24.4% 164 Year 2003 44.5% 8.8% 13.9% 32.8% 137 2002 32.4% 8.3% 16.7% 42.6% 108 0 50 100 150 200 # of Projects Television Feature Films Commercials Other Source: Los Angeles World Airports There were 108 productions filming on LAWA properties in 2002, a drop of roughly fifty percent from pre-9/11 levels. The number of productions has increased steadily since, with 137 in 2003, 164 in 2004, and 182 in 2005. Television has accounted for about one-third to one-half of the annual productions, more than doubling from 35 in 2002 to 92 in 2005. Multi-episode television series such as “LAX” and “Airline” each count once toward the annual total; curbside “arrival shots” for various LA-based reality shows account for much of the television activity in recent years. The number of television commercials shot, at least in part, on LAWA properties increased by 156 percent, from 18 in 2002 to 46 in 2005. This increase reflects a broader trend of continued growth in commercial production activity in Los Angeles as shown in Table 1. Commercials now comprise 25 percent of the production activity at LAWA. Feature films have made up less than 10 percent of the annual production total each of the past two years, with 9 films in 2004 and 18 films in 2005. The number of productions in the “other” category, which includes directors’ reels, student films, training films, photo shoots and a handful of music videos each year, has declined over the past four years and accounted for 14 percent of the total production activity at LAWA during 2005. The length of time each production spends on LAWA property varies considerably. Time on location includes “prep days” (building sets), filming days, and “strike days” (dismantling the sets and cleanup). Many productions spend just a single, often quite lengthy, day on LAWA property. Longer productions might take one to three weeks. A few notable exceptions take even more time. The television series ‘LAX’ was on location for many weeks in 2004. And the A&E television series ‘Airline’ filmed Monday through Friday for several months annually during its three year run. Relatively brief visits, however, are the norm. Productions filming motion pictures, made-for-TV movies, televisions series, and commercials all spend an average of three days on LAWA property. Music video productions average two days on LAWA property, and reality television shows average one day.