City to take over ownership of Calgary Film Centre, pay off studio's debt

City to take over ownership of Calgary Film Centre, pay off studio's debt

The City of Calgary is spending $13.5 million to pay off the debt on the two-year-old, $28-million Calgary Film Centre.

The city will be taking over ownership from its own subsidiary, Calgary Economic Development.

The transaction, which was approved in June and set to be finalized in September, is intended to free up the Calgary Film Centre financially.

"[It] allows more flexibility in negotiating rate cards in order to attract international business to Calgary," said Coun. Jeff Davison.

The city will pay down the approximately $12.5-million still owing on the facility, which is located in an industrial area in southeast Calgary, with the approximately $1 million remainder going to Calgary Economic Development which will continue to operate it.

Davison described the impact to Calgary taxpayers as, "taking over a house that has a mortgage left on it, so there's always going to be a residual cost."

However, he said anticipated revenue growth — which he said could come from increased flexibility on studio costs charged to filmmakers and a renewed marketing push — will benefit Calgarians.

"The city believes in the film and television industry, and really what we're doing here is investing in it," he said.

"It's a valuable asset … the city is not underwater on it and we don't think they ever will be, but if this doesn't pan out as we've planned, we don't think taxpayers will be left holding the bag on it."

The centre has had some growing pains since it opened two years ago.

The centre's rate of use per square foot dropped from 65 per cent in 2016, to just 52 per cent last year.

In 2016, the centre made $1.4 million in revenue, most of which came from rentals.

It had $1.9 million in expenses, related to amortization on the centre's property, interest on its debt and other operating costs, according to a financial audit presented to the Calgary Film Centre's board of directors in March 2017.

Calgary Economic Development executive chair Steve Allan said the film centre is a start-up, and as such will take some time before it really hits its stride.

"With carrying the amount of debt that we've had, we haven't had the flexibility to really make different kinds of deals with people so we've always been looking to set our rate structure as such that we could pay the debt and so on," said Allan.

"This gives us the flexibility to bring in different kinds of users, expose it to the creative industries in the broadest sense, and we can get that usage up."

Alberta film industry grew in 2017

Allan said Alberta's film industry saw growth overall in 2017, with the province bringing in about $300 million in production, 85 per cent of which was in southern Alberta.

The centre, which has three sound stages and 15,000 square feet of warehouse space, has hosted major productions like BBC's Tin Star and FX's Fargo.

Matt Watterworth, executive producer with Full Swing Productions, is one of the recipients of the film centre's funding grants for his upcoming feature film Jonesin.

"From my perspective, it seems to me that a sale like this makes the film centre more attainable for smaller productions or productions that are looking for a bit more flexibility when it comes to timing or price," Watterworth said.

"I think ultimately, the main goal has to be filling that studio as much as we can. From the perspective of the average taxpayer, we want to see that thing full all the time."

Watterworth said as someone with a smaller studio, he's not at the level to afford rates geared toward multi-million production budgets, but said the centre has been great for finding ways to support small, local productions — like allowing them to rent out warehouse space for sets instead of a big sound stage.

He said while the film industry has seen some slow years, right now he's competing with about eight other productions of varying sizes for crew — when usually that number would be closer to three or four.

"I know it's gonna take time [for the film centre] to reach its full potential but I think our industry in general is moving in the right direction to use it that way," he said.

'Lack of understanding' in market

Allan said one of the issues the centre hopes to tackle going forward is a "lack of understanding in the marketplace" of what Calgary has to offer.

He said the centre was recently in talks with a company along the lines of Netflix or Apple TV, and came close to a deal before U.S. executives turned it down — because Calgary's climate is "too cold."

But, other negotiations are in the works and the centre has teamed up with Los Angeles-based consultants to look into targeting smaller productions, like short films or even ad spots.

"We're optimistic that we're on the right track," Allan said.

"In a perfect world, we'll make it successful and sell off the assets to a private investor in a couple of years, [which would] be the ideal solution, but still have it here to use as part of our tool chest."

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