Wednesday, April 28, 2010
State Film Loans Questioned
By Dan Boyd
Journal Capitol Bureau
SANTA FE — Caution signs were out Tuesday as the New Mexico State Investment Council considered its relationship with a California-based film consultant, whose $350,000 yearly contract with the state recently expired.
For the second straight month, the investment council decided to extend the contract of Hollywood entertainment lawyer Peter Dekom only on a month-to-month basis.
The action on Dekom, who has advised the state on film investments since at least 2003, came as one new member of the revamped council questioned whether the state's film loan program should be continued.
"We only need a consultant if we're going to stay in the film business," said newly appointed SIC member and former state Sen. Leonard Lee Rawson of Las Cruces. "I think we have the authority to invest in films. I don't think we have a mandate to invest in films."
Rawson said he wants more review on whether the state's film incentives have been good investments for New Mexico, which has had recession-related budget problems.
Gov. Bill Richardson's finance secretary, Katherine Miller, defended the film loan program, noting that it has been a key factor in developing the film industry in New Mexico.
Recently hired state investment officer Stephen Moise negotiated Dekom's contract for the current month down to $15,000 — about half of his previous pay level — and said Tuesday that he'll seek to strike a similar deal for May. Dekom did not attend the meeting Tuesday in Santa Fe.
The month-to-month contract has been adopted so more applications can be solicited for the permanent film adviser position.
Moise said he's already called personal contacts with connections to the film industry in Los Angeles and New York for possible recommendations.
"The idea is just to make this competitive," Moise said.
Dekom has been paid $350,000 per year by the state to advise which New Mexico-produced films should receive loans under a special state program. The program has lent $274 million to about two dozen film and television projects through February, according to The Associated Press. It also has resulted in nearly 5,000 jobs for crew members in the state and direct spending of nearly $270 million, the AP said, citing investment council records.
Dekom once was named one of the "50 Most Powerful People in Hollywood" by Premiere magazine.
The state's return on the interest-free film loans — which come from one of the state's permanent funds — has been minimal to date, although state Film Office Director Lisa Strout said that could change with the box office success of "The Book of Eli."
The SIC approved a $15 million loan for the film, which has grossed more than $147 million in domestic and international theaters, according to Internet reports.
"I do think this is a crucial point for the program where we're going to start making money, not just the status quo," Strout said.
Richardson has been a leading advocate of the state's film incentives, which also include tax rebates available to movies that are shot in New Mexico. The rebates cost the state about $80 million in 2008.
State lawmakers overhauled the makeup of the SIC earlier this year after the agency was confronted with investment scandals. The overhaul focused on decreasing the governor's influence over the agency, which oversees nearly $14 billion in investment funds.
The council's 11 members — six of them appointed as a result of the new law — held their first full meeting Tuesday.
In addition to the film debate, members also approved a $250,000 annual salary for Moise that's about 20 percent lower than what his predecessor was paid. Moise's term is slated to run through June 30, 2011.
The previous state investment officer, Gary Bland, who resigned last October in the face of a no-confidence vote, was paid slightly more than $300,000 a year.
Also on Tuesday, Sen. John Ryan, R-Albuquerque, urged SIC members to comply with Fraud Against Taxpayers Act lawsuits filed on behalf of former Educational Retirement Board investment officer Frank Foy.
The lawsuits seek to recover money for the state stemming from $288 million in investment losses.