Cities and states are discovering that the giveaways they've been offering Hollywood production companies are far from the economic salvation they were expecting. The latest cautionary tale comes out of Allen Park, Michigan, which sold $31 million in bonds to buy and improve 104 acres so that a Burbank-based post-production company, Oracle Post, would supposedly develop a studio. The company's president, Jimmy Lifton, promised 3,000 jobs. Well, Lifton is back in California and Allen Park is stuck with huge debt payments from those bonds - so huge that the community might have to disband the police and fire departments. So what happened? From Businessweek:
Lifton opened a movie-making school at the site to prepare workers for Unity's anticipated productions. Tuition ranged from $3,000 for script-supervisor training to $13,000 for classes on becoming a stunt coordinator, according to state records. Under a job retraining program, taxpayers helped fund a majority of the school's students. The state of Michigan paid an estimated $871,000 in tuition for 127 of Lifton's 201 students, according to Southeast Michigan Community Alliance, a group that helps the unemployed find work. The school closed in 2010 after Lifton and Allen Park became embroiled in a dispute over their lease agreement. Lifton walked away without any liability, current and former city officials say. The city was charging Lifton $168,000 in annual rent on an office complex and had loaned him about $225,000 for renovations. Lifton left town without paying any of that back under a hold-harmless agreement with the city, says acting Administrator Dave Boomer.
By and large, incentives make for terrible economic policy, whether it's Allen Park or the entire state of California.