Studio builder protests tax rule

• By MICHELLE MILLHOLLON
• Advocate Capitol News Bureau
• Published: Oct 23, 2008 - Page: 4B - UPDATED: 12:05 a.m.

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The developer of a Baton Rouge film studio told lawmakers Wednesday that he was taken aback by a narrow window for receiving tax credits from the state.

Robert Day said the state is trying to impose an unfair deadline for qualifying for maximum incentives. He said he did not learn until December that he needed to complete construction by the end of next year on his $650 million Red Stick Studios to get the type of tax credit he expected.

At issue is a generous tax break that film studio developers like Day are eligible for because they applied for incentives before August 2007.

The Louisiana Legislature tightened the law last year, limiting future projects to a $25 million cap on infrastructure tax credits.

In dispute is what the new law means for projects, like Day’s, that were in the pipeline prior to the Legislature imposing a limit on the tax credit program.

The Jindal administration says that legislators gave the projects until the end of 2009 to collect their tax break regardless of whether or not the project is completed. The state only allows developers to lower their tax bill by receiving a credit for money already spent.

Some studio developers contend that the new law means they only are required to spend $10 million or 20 percent of their project’s total cost by Jan. 1, 2010.

Under the interpretation by Gov. Bobby Jindal’s state Department of Economic Development, Day would only get an unfettered tax credit on what he has spent by the end of 2009.

The state Attorney General’s Office waded into the dispute over the pre-August 2007 projects, issuing an opinion that sides with the Jindal administration’s interpretation. Another opinion has been requested.

Day, who said his company has roots in Louisiana, said it will take him six to seven years to complete his project.

Lawmakers at a joint meeting of the House Committee on Ways and Means and the Senate Committee on Revenue and Fiscal Affairs questioned whether there is a motive for the Jan. 1, 2010, deadline.

“We shouldn’t be making it difficult for our own folk,” said state Sen. Yvonne Dorsey, D-Baton Rouge.

Dorsey suggested there is an underlying reason for why Day is encountering problems.