Legislature awaits results of state probe of film tax credits

DES MOINES – The Legislature's Oversight Committee declined Thursday to investigate problems with state tax credits issued to movie producers by Iowa's film office as the state auditor and attorney general investigate.

“Oversight's job has always been to oversee, but we've also learned to be patient,” said committee co-chair, Rep. Vicki Lensing, D-Iowa City. “When there are investigations going on, we sometimes have to let that happen.”

Lensing said they hoped to have an update on the situation by next week or their next meeting, when she hopes someone can talk to the committee about the situation.

Rep. Ralph Watts, R-Adel, questioned why the committee could not discuss the issue in light of three state economic development and film officials that have resigned or been terminated.

Watts, the ranking member on the committee, later sent out a statement criticizing a lack of action by the committee.

“The Legislature approved the film tax credit and has a responsibility to find out why the program has been mismanaged and abused,” Watts said. “Frankly, the only thing keeping that discussion from happening today is politics.”

Rep. Clel Baudler, a Greenfield Republican and member of the committee, said he is willing to wait for the oversight committee to act until after State Auditor David Vaudt is finished.

“I trust him,” Baudler.

But he said if there is found to have been a falsification of records or changing of contracts after they have been signed, the Legislature should act quickly.

“It should be swift and immediate,” Baudler said.

Atop the list of items being scrutinized were two luxury vehicles – one a Mercedes purchased by “Children of the Corn” producer Donald Borchers for $52,775 at Lujack's Northpark Auto Plaza in Davenport and another a 2008 Land Rover purchased by Bruce Isacson, who filmed the movie “South Dakota” near Earlham last spring.

In an interview Wednesday, Gov. Chet Culver, who has suspended the film tax credit program pending a state probe, said the luxury car purchases were the biggest red flags among the many concerns over alleged mismanagement, abuses and lax oversight.

“I was very disturbed by some of the things that I learned,” he said. “Buying luxury vehicles that weren't used in films, it sounds like someone was trying to take advantage of the program.”

On Thursday, DED spokeswoman Erin Seidler confirmed that Borchers has contacted state officials in an effort to resolve the car purchase issue. She said the vehicle claims likely only amounted to a 25 percent tax credit provided for project producers – the other 25 percent eligible tax credit is certified for film investors.

Doug Miller of Motion Pictures Midwest in Davenport has worked as a field producer on the movie “Sugar” and as a consultant on others including “Children of the Corn” and “Megafault.”

Miller has had concerns about whether Iowa's film tax incentive program could keep up with the big response it was getting in the entertainment industry.

“There's only so much work that one man can do, and I've been frustrated about that for some time,” Miller said.

He said the office did the best they could with the resources they had.

He's hopeful that any problems can be corrected.

“It may sound a little corny, but Iowans are known for being able to recognize a problem and then correct it and do that in an earnest fashion and an honest fashion,” Miller said.

Miller said no one expected the volume of projects that would apply.

“You've got a new program so everybody and their cousin is applying for these kind of incentives and things going on, and whether or not those projects were really ready for prime time is another story,” Miller said.

He estimates that may 10 to 20 percent of those projects will be able to move ahead.

“That's the nature of the business,” Miller said.