Success wasn’t coming cheap for Brian Drewes and Sean Devereaux.
Their Boston-based company, Zero VFX, which provides post-production visual effects for film and television, was growing fast. They needed to process vast media files, but they didn’t want to go into debt on an army of expensive computers.
Their solution? The partners founded a separate company to develop Zync Render, a cloud-based program enabling users to process large media files on Amazon’s servers. They hired five software engineers, and Devereaux says Zync Render was so successful that many of last year’s nominees for best picture used it before Google acquired the start-up in 2014.
It’s a far cry from what most people think of when they consider the economic benefits of the Massachusetts film tax credit, which provides a 25 percent break to eligible films. But Devereaux and Drewes say their software start-up, which did not directly receive Massachusetts film tax incentives, would never have launched without that program — an ancillary benefit they say is unaccounted for when economists calculate the program’s economic impact.
Now, like many who work behind the scenes in the state’s burgeoning film industry, the pair worry their company will suffer, as Governor Charlie Baker has proposed ending the tax credit.
“It feels like a gut punch,” said Devereaux, who cofounded Zero VFX after returning home from Los Angeles because of the incentive. “We’ve reinvested everything back in the company. We’ve taken risks every day. We’ve never sat on our laurels.”
Zero VFX is in many ways a poster child for the incentive program. Founded five years ago in Devereaux’s Newton basement, the company now has more than 50 full-time employees. Its sleek Bay Village offices provide digital effects for such high-profile Massachusetts films as “Black Mass,” “American Hustle,” and “The Equalizer,” as well as post-production services for advertising firms.
More importantly, though, the partners say the tax incentive has enabled them to build infrastructure and hire top talent, making them competitive with firms in Vancouver, British Columbia, and Los Angeles. They say that although Zero VFX once relied on productions that received the tax incentive, much of their work now comes from out-of-state films and commercials that didn’t.
“We’re able to bring these projects in and leverage a lot of non-incentivized work because of the ways we’ve matured and because we have other pieces that are incentivized,” said Drewes, adding that four of their last five films were shot out of state. “Boston isn’t thought of as a visual effects industry area, but we’re proving that’s not that case. That’s why it’s important that the incentives remain unmolested, because we’re at the point where we’re growing a real industry.”
Film workers say ending the tax credit would not only kill that nascent industry, but also disrupt the careers of thousands of film professionals, people who have built careers and made sizable investments — personal and professional — under the assumption the incentive would remain in place.
But is this the best use of taxpayer funds? The Massachusetts Department of Revenue reports that between 2006 and 2012, the state doled out $356.7 million in film credits, which by the DOR’s math meant each Massachusetts job cost the state roughly $118,000. Those jobs had a median income of nearly $65,000.
“We’re using about twice as many taxpayer dollars for each dollar of salary that is going to a Massachusetts worker,” said Peter Enrich, a law professor at Northeastern University Law School who specializes in tax incentives. “I’m pretty sure this is a bad investment of state money.”
The DOR estimates that in 2012, $83.5 million in production spending on wages for people making more than $1 million annually was eligible for the film tax credit — and the majority of them lived out of state. Governor Baker has proposed to funnel the money currently allocated for the film tax credit into the state’s Earned Income Tax Credit program, which benefits low-income families.
“This is primarily about putting more money in the hands of local families,” said Paul McMorrow, director of policy and communications at the state’s Executive Office of Housing and Economic Development, which oversees the Massachusetts Film Office. “Creating jobs and paying wages out of state? It seems like a logical place to look. . . . That money is better used in the hands of local families.”
But state film workers say the DOR report only tells a fraction of the story.
Melissa Cooperman first started working in film as a production assistant in the late 1990s, often waitressing and selling jewelry to make ends meet.
“Then the tax incentive came,” said Cooperman. “Now I have a solid job. I make a living. I was able to buy a home, a car. I spend money in the state. I’m not rich, but I’m solid working class.”
Cooperman, who now works in set decoration, spends her days buying items for film sets. She estimates she spends $10,000 per week at local businesses, procuring everything from desks and credenzas to period telephones and coffee makers.
“I shop all over the state,” she said. “All the local businesses and vendors, thousands of people are making money off of films spending money here.”
Like many film workers, Cooperman said she doubts the DOR report fully accounts for these ancillary benefits to local businesses like dry cleaners, lumberyards, and antiques stores.
“I was spending thousands of dollars a day between mid-January and February, when we were apocalyptic,” she said, adding that one shop owner told her he hadn’t had a customer in two weeks.
The DOR estimates that in 2012 tax incentives resulted in roughly $304 million in new spending. Contrary to the widely held belief among film workers, DOR spokesperson Maryann Merigan says the figure accounts for secondary economic activity.
“DOR does account for this spending,” wrote Merigan in an e-mail. “DOR categorizes every dollar spent by all film projects in 2012 and allocates them to over 20 types of spending. These include cleaners, construction, clothing stores, etc.”
What the report does not account for, say many film workers, is the professional expertise it is creating, enabling local companies to bring projects into the state that weren’t offset by tax incentives. David Waller, who mortgaged his house in 1999 to start Brickyard VFX and now employs 22 full-time employees at his visual effects company, says the tax credits have been essential to building his business.
“There’s no way to grab ahold of it, but the unintended consequences of this just means more business,” said Waller, who plans to move his operation to an 8,000-square-foot facility near South Station. “You can’t really track it, but there it is.”
Frans Weterrings, who cofounded Red Herring Motion Picture Lighting with David Cambria in 1997, spent the first 10 years of his career traveling back and forth between Boston and Los Angeles. Whenever Weterrings got a contract, he’d pack his lights and generators into a container truck and head to California.
“It was incredibly expensive,” said Weterrings. Since Massachusetts began offering film tax credits in 2006, however, he’s worked exclusively in state. “We have gone constant gangbusters since then.”
Last year, Weterrings and Cambria expanded their business, starting Allston-based Red Sky Studios, which houses two soundstages for films and commercials. Between the two companies, they now employ 10 people full-time and keep another 50 “busy throughout the year,” Weterrings said.
On a chilly afternoon, while Weterrings was in Sturbridge managing lighting on the set of “The New World,” an HBO pilot directed by Gus Van Sant, his wife, Tiffany Kinder, was overseeing operations at Red Sky Studios, where one crew was planning a commercial and another was loading trucks with equipment for two feature films.
“Everybody involved in the ad is local,” said Kinder, who moved here from Los Angeles. “It’s the same for makeup, hair, and sound.”
Kinder made her way through the bustling warehouse where workers built transport shelves and loaded lighting equipment. “It’s been like this since the tax credit,” she said. Losing the credit “would be devastating.”
Hearing her comment, one of the milling crewmembers stopped by the truck he was loading.
“None of us would be here without the credit,” he said, a knit cap protecting him against the cold. “We would be home collecting unemployment and planning to move to New York.”
Malcolm Gay can be reached at email@example.com. Follow him on Twitter at @malcolmgay.
Correction: An earlier version of this story misidentified the location of Red Sky Studios.