Lionsgate Studio in Newark could qualify for tax break up to $100M

A $194 million film and television studio could qualify for up to $100 million in state subsidies as part of a deal approved Dec. 21.

Lionsgate Studio in Newark could qualify for tax break up to $100M

A $194 million film and television studio being built in Newark could qualify for up to $100 million in state subsidies as part of a deal approved Dec. 21.That comes at the heels of Netflix's plans to spend over $850 million to redevelop nearly 300 acres of the former Fort Monmouth complex into its own studio complex.State officials say both are evidence of a burgeoning film and TV industry ushered in by the Murphy administration and a lucrative state subsidy program. 'We believe that between our variety of locations, the quality and diversity of our workforce and best-in-class tax credit, New Jersey is exploding as a destination for film and television production,' reads a prepared Wednesday statement from Gov. Phil Murphy. The agreement was approved Wednesday by the state's Economic Development Authority, and makes Lionsgate Film the state's first ever 'studio partner.' Lionsgate will be the anchor tenant for the 300,000 square-foot studio facility being built by Great Point Studios in Newark.

Construction began this September and is expected to commence in two years. 'Lionsgate will be a welcome addition to the film landscape, and we look forward to seeing the ‘Filmed in New Jersey' logo on Lionsgate films for years to come,' reads a statement from Tim Sullivan, the EDA's chief executive officer. The studio partner status means that expenses such as salaries for directors, producers, writers and performers can count towards state aid, up to $15 million, $25 million, $40 million or $60 million depending on how many qualified expenses there are in a project. . Lionsgate would be eligible for its own $100 million pool of incentives, according to EDA board documents. Under the state program, there are three total studio partners, which each have to commit to occupying a space of at least 250,000 square feet for at least 10 years. Only this first slot has been filled. The studio will be a joint project by Great Point, Lionsgate and the New Jersey Performing Arts Center.

It will employ 600 people. Located two miles from Newark Liberty International Airport, the studio will offer six soundstages and production services including prop and set building, restaurants and catering, the state said. Great Point CEO Robert Halmi said the site will accommodate up to three separate productions at once; in a best-case scenario, each would employ upward of 400 staff, he said. Lionsgate, based in California, owns the "Hunger Games," "Twilight," and "John Wick" franchises and is also the creator of prestige fare like "La La Land," "Mad Men" and "Orange is the New Black." It bought the Starz cable network in 2016. Halmi, the Great Point CEO, declined to say how much the Newark project would benefit from the tax break program, but he said it would have been impossible without the state's help. "Without incentives, there is no film [industry]; it just doesn't happen," he said. New Jersey has awarded over $401 million of incentives to film and television productions since 2018, seeking to lure business to the state, according to the state's Economic Development Authority. The program has had some success. Productions including Steven Spielberg's 'West Side Story' and the Academy Award-winning 'Joker' received multimillion-dollar awards. "West Side Story" shot scenes in Paterson and "Joker" in Newark.The state has offered bigger tax breaks to entice producers into South Jersey towns as well, touting New Jersey's diversity of urban, rural and scenic backdrops. Still, critics of the tax incentives have been skeptical of the touted benefits.In a 2019 report, the Sol Price School of Public Policy at the University of Southern California looked at programs in New York, Louisiana, Georgia, Connecticut and Massachusetts and concluded that 'incentives paid by states to the entertainment industry are not generating the jobs and economic growth as intended.' Michael Thorn, one of the report's authors, said Tuesday that the Newark project didn't change the overall assessment.

"Will the film industry's activities generate enough in benefits to justify the costs of the tax break? Based on peer-reviewed studies and state government assessments nationwide, the answer is 'no way,'" he said via email.