Louisiana Voice

The movies Dawn of the Planet of the Apes, Terminator, Jurassic park 4, Ender’s Game, and G.I. Joe: Retaliation were all shot in New Orleans. More specifically, they are all filmed in the Big Easy Studios in New Orleans. http://www.bigeasystudiosneworleans.com/aboutus.php

Geostorm, starring Gerard Butler as a satellite designer who goes into space to thwart climate-controlling satellites from creating catastrophic storms, just started shooting in the Big Easy Studios which are housed, appropriately enough, in the Michoud Assembly Center which once built the space shuttle’s external tanks before the shuttle project was scrapped by NASA.

All of which begs two single overriding questions: did Big Easy Studios receive favorable treatment in landing the lease of the 1.8 million-square-foot facility and were other Louisiana-based studios afforded the same opportunity to compete for a similar deal with NASA?

Taking the questions in reverse order, we will probably never know what chances, if any, other studios had to vie for the space but at least one competitor said there was no open competition for the facility.

The answer to the first is shrouded in secrecy as lease terms, including rental and payments, as well as the very signatures of Big Easy principals signing the lease were redacted throughout the 28-page lease document. We suppose lease payments may be some kind of protected state secret which fall under the heading of national security.

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Still, with conspiracy theorists out there who continue to insist the 1969 moon landing was staged, one would think NASA would be a little skittish about leasing out its facilities for movie making.

But there are more serious issues involving NASA’s decision to lease the gigantic facility to a movie production company. For openers, NASA’s rules say that any deal with an outside entity must serve the agency’s mission. NASA’s response was that anything that brings the federal government revenue serves NASA’s mission. Taking that logic to its extreme, it would seem safe to say a meth lab or house of ill repute could conceivably qualify under that definition.

NASA rules also dictate that any lease agreement must recover the full cost of the rented space and must not create unfair competition with the private sector by undercutting its lease terms. Yet, competing studios maintain that first, they were not given the opportunity to compete for the lease and the lease arrangements with Big Easy Studios and second, that they pay higher rent per square foot than Big Easy Studios.

So just how did Big Easy gain such an advantage, if indeed it did?

To answer that, we must take a look at the two principals of Big Easy Studios.

Herbert W. Gains, an independent filmmaker, was in New Orleans in 2010 to film Green Lantern, much of which was shot at the Lakefront Airport.

At the same time, The Lathan Co. of Mobile, Alabama, was under contract to perform major repairs and restoration work to the airport which had been heavily damaged by Hurricane Katrina. http://www.lathancompany.com/portfolio/lakefront.html

Lathan Co. President Jerry Lathan, a member of the Alabama Republican Party’s State Executive Committee who had worked in the presidential campaigns for Bob Dole and both Presidents Bush as well as other local, state and national Republican candidates, also had contracts for restoration of a number of other structures, including four others in New Orleans and one at East Louisiana Hospital in Jackson.

http://www.lathancompany.com/projects.html

Lathan, who reportedly likes to boast of his political contacts, would probably have had connections at the U.S. Space & Rocket Center in Huntsville, Alabama, through which he could have assisted Gains in acquiring access to NASA.

http://algop.org/jerry-lathan/

Big Easy Studios was incorporated on Nov. 9, 2011, with Gains and Lathan as the only officers, and the lease with NASA was signed by an unidentified officer of the new company (remember, that name was redacted) 16 days later, on Nov. 22, 2011. An amendment to the contract was signed less than three months later, on Feb. 14, 2012, by Robin Henderson of the George C. Marshall Space Flight Center but again, the names and signature of the Big Easy officer were again redacted.

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Stephen Moret, secretary of the Louisiana Department of Economic Development (LED), said his office had “many conversations” with NASA about the need to offer more competitive lease rates at Michoud to better position the facility to attract “advanced manufacturing projects.”

The director of operations for one competing studio told the Baton Rouge Business Report in 2012 that he had heard from producers that Big Easy received lease rates more favorable than his studio. “The taxpayers didn’t fund Michoud to make movies,” he said. “The lease with Big Easy Studios was a done deal before we even knew the facility was available.”

http://businessreport.com/article/20120917/BUSINESSREPORT0112/120919831/

While, studios located in Louisiana once received 40 percent infrastructure tax credits—discontinued in 2009—the movies filmed in those studios still receive movie production tax credits and the system quickly led to widespread abuses that prompted the conviction and a 70-month prison sentence for for Martin Walker of Baton Rouge for his activity involving the buying and selling of Louisiana motion picture investor tax credits. He also was ordered to pay more than $1.8 million in restitution to 24 victims of his fraud.

In 2009, revisions to state incentives guaranteed a tax credit of 30 percent of expenditures provided a production spends more than $300,000 in Louisiana. Major productions like Twilight: Breaking Dawn can receive state tax credits of $10 million to $30 million.

Because most productions don’t owe any taxes in Louisiana, there is no need to claim the credits but they can transfer those credits to the state and the state will cut the companies a check for 85 percent of the face value of the credits. Thus, if a production company earns $1 million in Louisiana tax credits, those credits can be transferred back to the state and the state will issue the company a check for $850,000.

Another option, a variation of which landed Walker in hot water, allows production companies to sell their credits to individuals or corporations who do owe taxes in the state at a discount. Should an individual or corporation owe the state $1 million, for example, and a production company holds a $1 million tax credit, the production company may sell its tax credit to a speculator for say, $500,000 and that person in turns sells the credit for $750,000 to the individual or corporation owing the $1 million in taxes who then receives a $1 million tax credit—and each party profits $250,000.

That means when production companies sell their credits to the private sector, state taxpayers end up subsidizing tax breaks for high income individuals and corporations.

In Walker’s case, though, he sold bogus tax credits with a face value of more than $3.8 million to 24 investors for $2.5 million.

Louisiana Inspector General Stephen Street said of the Walker matter, “This sort of blatant fraud undermines the entire tax credit program and cannot be tolerated. We will continue working with the FBI and United States Attorney to make sure that those who engage in this sort of corruption face criminal consequences.”

Former State Film Commissioner Mark Smith described the movie industry in Louisiana as “smoke and mirrors.” He said in Los Angeles and New York, “I can see the headquarters and see who the real players are. In places like Louisiana, who can see it?”