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Audit of Colorado Film Office shows $1.9 million in incentives did not meet requirements

Author: Peter Marcus - June 5, 2017 - Updated: June 6, 2017

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A scathing state audit of the Colorado Film Office released Monday states that it paid about $1.9 million in incentives for projects even though none of them met all requirements.

The audit identified $129,000 for projects that did not qualify for incentives and another $1.8 million for projects for which the Office of Film, Television, and Media “lacked documentation to substantiate they qualified.”

“Paying incentives for projects without ensuring they qualify reduces the funds available for qualifying projects and diminishes the long-term economic benefit to the state,” the audit stated.

The findings include:

  • The Film Office paid about $1.9 million in incentives for productions without having contracts in place before the projects began;
  • Film Office staff decide whether to approve an incentive based on undocumented conversations with interested companies;
  • The Film Office lacks complete and accurate information to assess and report on the effectiveness of its operations, including failing to collect data on full-time equivalent jobs created through the incentive program or the amount of tax revenue the state collects due to jobs created.

Film incentives were a point of contention in the legislature this year, with several lawmakers arguing against extending incentives. There was a proposal to eliminate incentives in the $26.8 billion annual state budget. Budget writers settled on $750,000.

To qualify for a film incentive, at least 50 percent of a production company’s employees must be Colorado residents.

Requirements also include that $100,000 must be spent in the state if the company is an in-state company, and $250,000 must be spent in the state for commercials, video games and television shows, or $1 million for films, if the company is not based in the state.

The Film Office paid a total of $10.6 million in incentives between 2013 and 2016, for 31 productions, including six commercials, four documentaries, seven feature films, 13 television shows, and one video game.

The audit recommends that the office implement controls to only pay incentives for projects the Film Office verifies as meeting state requirements; document all applications and processes; and expand data to show benefits to the program.

In response to the audit, the Film Office stated:

“Colorado has become a premier production location with skilled crew. The Office of Film, Television and Media plans to implement the six procedural recommendations from the Office of the State Auditor to ensure the continues success of the industry in Colorado.”

 

Peter Marcus

Peter Marcus

Peter Marcus is senior statehouse reporter for Colorado Politics. He covers the legislature and previously covered politics, the governor’s office, the legislature and Congress for The Durango Herald. He joined The Herald in 2014 from The Colorado Statesman, a Denver-based political weekly. The Washington Post twice named Marcus one of the nation’s top state-based political and legislative reporters.