Relativity Media’s CEO Ryan Kavanaugh is visiting with Hawaii Senators today to lobby for a substantial boost in film tax credits and subsidies for his company, and partner Shangri-La, in exchange for constructing a stage for film and television production and the promise of filming more television and movie productions here.
As Hawaii Reporter detailed last week in “Shock and Awe,” he’s already used former President Bill Clinton as a lobbyist for the tax credit and subsidy legislation, having Clinton author a letter to lawmakers last week on his behalf.
Tonight, Kavanaugh will attempt to “wow” Hawaii lawmakers into supporting his plan, with an invitation-only Valentines reception from 7 p.m. to 9 p.m. at the Mandalay.
“There will be several surprise movie star guests from Hollywood in attendance at this reception party. These surprise guest are already here in Hawaii at this time vacationing and have confirmed that they will be at this reception party per Mr. Kavanaug,” said an email sent to House lawmakers today from Democrat Rep. Mele Carroll, who serves as the House Majority Whip.
But on this Valentines night, lawmakers are the only invitees – no staff or spouses allowed.
Carroll’s office, which says the tickets are valued at $30, is accepting the reservations from House lawmakers on Kavanaugh’s behalf.
Relativity Media reported $2 billion in revenue last year, with adjusted earnings four to five times greater than in 2009.
Kavanaugh’s company, which produced top-grossing movies such as The Fighter at $320 million and Robin Hood at $311 million, often works in partnerships with industry giants Lionsgate Entertainment, Sony Pictures and Universal Studios.
Backed by private equity investor Elliott Management, the Relativity CEO said last year that it is preparing for a possible public offering of stock; It also purchased the distribution and marketing arm of Overture Films from Liberty Media Corp., last July.
Industry reports say the film company plans to release 30 movies this year, including 15 to 18 movies of its own and another eight to 12 with NBC’s Universal Pictures and Sony Pictures.
The Hawaii deal Kavanaugh wants to broker includes an increase in tax credits on Oahu by 35 percent (from 15 percent) and 40 percent (from 20 percent) on the neighbor islands.
Additional tax credits would be driven by new infrastructure and productions utilizing animated special effects, while the companies could benefit from hotel room tax exemptions, otherwise known as the Transit Accommodation Tax, if their productions require more than one month of filming. They could also rack up rebates if they offer training programs.
The legislation would cost the state an estimated $46.3 million in lost revenues, according to the state tax department.
Lowell Kalapa, president of the Tax Foundation of Hawaii, says lawmakers get “ga-ga” over celebrities and forget to ask how much the legislation will cost taxpayers and how much money and resources it will take away from essential programs such as education and social services.
He opposes the plan says it enriches a few already wealthy businessmen, creates only short-term employment, while leaving the state taxpayers worse off.