State “whittling down” financial cost of defunct film-tax credit program

DES MOINES – State officials have “whittled” a potential financial exposure once estimated as high as $330 million down to “a handful” of projects involving a fraction of the liability where settlements are still being negotiated, according to Jeffrey Thompson of the Iowa Attorney General's Office.

“We're down to just a handful of movies where the total claims that haven't been resolved for credits, if you add them altogether, are probably less than $20 million. Those are the ones that are kind of still in play,” Thompson said Tuesday. “That's kind of the universe now.”

Thompson, a deputy attorney general working the civil side of the film tax credit investigation, said discussions with filmmakers have pared a potential state payout from about $330 million for 158 registered projects to a much-smaller amount with settlements to date totaling more than $1.2 million.

The latest settlement was over $265,000 in state tax credits and nearly $60,000 in cash paid to the producers of a feature-length film called “Smitty.” Previous pre-litigation settlements of $450,000 were paid to Midsummer Films, which had registered six projects under Iowa's now-suspended film tax credit program, and more than $434,000 paid to After Dark Films to resolve contract disputes regarding tax credits for the films “Husk” and “Fertile Ground.”

Gov. Chet Culver suspended the state tax-credit program in September 2009 when details of lax oversight and mismanagement came to light, including revelations that two filmmakers had purchased and kept luxury vehicles using tax credits from the program.

After the scandal broke last year, six people lost their jobs within the state Department of Economic Development - including the agency director, his deputy, and former Iowa Film Office director Tom Wheeler, who faces trial in Polk County District Court next week on several felony charges. State Auditor David Vaudt issued a special report last year that determined only about 80 percent of the $32 million worth of the tax credits had been properly awarded.

“Clearly, the worst-case scenario was really bad and it's taken a long time and a lot of people have worked really hard to narrow it down,” Thompson said on Tuesday.

“For the people who did spend money and it's verified money and they were a registered project in the program, we've been working real hard to try to find a way to work through that, which we think has been good for the state,” he said. “We've narrowed down the potential liability and we're trying to be as fair as we can. Certainly, there are people who are not happy, there's no doubt about that, but we're trying to do the best we can to work through what was a real big collection of projects that had been registered into the program.”