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April 20, 2016

Self-sufficient regulation: Who's the real customer?

When I moved in LA as a hungry freelancer, a gallon of gas was 65-cents and a stamp was 15 cents. If you worked with a crew of less than 20, it didn't really matter much if you had a filming permit. The risk was low; unless you got unlucky and caught the attention of a curious cop. It was the wild west. No one interferred.

Bigger shoots were different; you were sure to get attention. You needed a union crew, a cop and a permit. So you called Acme Permits Inc for the permit and the cop. For a couple hundred bucks, Acme arranged all the particulars. Even dropped your permit off at the production office. Life was good.

In those days, filming on-location was just becoming the norm. Film crews in the neighborhood were still a novelty. Neighbors were curious and friendly. You could shoot at all hours. There were plenty of twenties to hand around. And, when it came to lawnmowers or chainsaws, the union men or the cops would be all business. How times have changed. At least in LA.

In 1990 the LA County Supervisors passed an ordinance that instituted the "Film permit Coordination Office" (Chapter 2.118. Ord. 90-0093 § 3, 1990). The ordinance established a government service with the mandate to issue filming permits and collect fees. FilmLA's predecessor, Entertainment Industry Development Corporation, was founded as a non-profit and obtained the contract to provide the service.*

Under the Ordinance sub-heading, "Office to be self-supporting—Cost-recovery fee schedule", the Ordinance set an "administration fee" of $315 with a formula for increasing the permit fees based on the CPI. Currently the fee is $635 which is more or less in line with the past 26 years of inflation. (According to the Bureau of Labor Statistics, prices have gone up about 82% since 1990.)

Regulation without cost? For a nominal amount, the industry was going to pay for it's own regulation. It wouldn't cost the taxpayer a nickel. What could be better?

But, take a close look and you might see a couple flies in the ointment.

For one thing, the price of FilmLA's basic permit application is about the most expensive around. Check out the table below. Aside from Sierra Madre and Pasadena, an application for a filming permit in Altadena is the most expensive in the area. More expensive than San Marino, New York City, or San Francisco. It's nearly twice the cost of pro-film communities like Santa Clarita and Burbank. And Riverside is free! (Think mattress sale.) These prices make for a sharp contrast with pro-film Louisiana and Georgia. I know that if I was still in the film biz, I'd just assume skip the hassle and expense.

Film Permit fees
Film Permit Office
Application fee: $625
Atlanta, GA
Application fee: $100
Application fee: $272.95 (1st day)
$81.89 ea additional day
Application fee: $187 + 300/day
Application fee: $350/ 7 days
Application fee: $325
La Canada
Application fee: $100 + Film: $100
Los Angeles
Application fee: $625
Application fee: $0 (no fees)

Application fee: $500
Historic preservation: 75
New York, NY
Application fee: $300
Application fee: $716.96 per day
Parking signs: $1ea
Application fee: $500
Application fee: Free
San Dimas
Application fee: $347
San Francisco
Application fee: $200-300
San Marino
Application fee: $500
Santa Clarita
Application fee: $363
Sierra Madre
Small:$1034 1st day; $775 additional day
Large: $1701 1st day; $1,362 additional day
PLUS other charges
Note: these figures do not include all the extras that can easily double or more the cost of a permit.

If you should happen to also be thinking that the relatively high cost of a filming permit might be a disincentive to companies who might be interested in filming in Altadena, then consider this: the California Film and Television Tax Credit Program 2.0 gives film companies an added 5% bonus in tax credits if they take their business out of the "LA zone." If you just consider fees and taxes, Altadena may not be such a great place to shoot. I digress.

Why then is a FilmLA permit comparatively expensive? My hunch is that other governments with cheaper fees subsidize the cost of permit coordination. In other words, the business of issuing film permits is at least partly paid for by the taxpayers.

Is that a bad thing? Isn't "self-supporting" inherently good? The question suggests there's something else in the ointment of a self-supporting regulation.

Consider this: FilmLA has $10M in annual expenses, nearly 100 employees and a $300K per year CEO. That's a LOT of permits at $635 a pop. Let's try a conservative estimate. Let's say that FilmLA is able double the permit tab (by including charges for a Monitor and a few extras) so that the average permit fee for a film shoot comes to around $1,200. To make that mark, FilmLA must print around 8,300 permits per year or about a 150 per week. Mind you FilmLA provides permits for LA County, LA City, Monrovia and a few spots in Orange county so the volume might be there. But no matter, that's a lot of permits to crank through just to make their nut.

Here's the rub: If you think of a customer as someone who pays you money for a service, then FilmLA's customers are the film companies. Not the County. Not the neighborhoods. The film companies.

Sure there's a stipulation in the County Ordiance to "avoid or mitigate adverse effects or incompatibility between such short such short-term land uses activities and the surrounding area where these temporary activities are proposed," but without 30 film companies knocking on FilmLA's door every day, FilmLA goes bust.

All of that leads me to think that if FilmLA seems more protective of the film industry than our neighbors, it makes perfect sense. After all, who's the real customer?

* In 2005, the name was changed its name to FilmLA shortly after its President was found guilty of misdemeanor forgery.

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