Nine years ago, legislators agreed to give lucrative tax breaks for movies, TV shows and commercials made in Illinois.
And to help ensure whether minorities and women get a piece of the booming action that so far has led to tax breaks totaling more than $330 million, they said the state agency that handles those tax breaks “must” give them yearly reports on their hiring.
But the agency that runs the Illinois Film Office routinely has violated that part of the law, a Chicago Sun-Times investigation has found.
The Department of Commerce and Economic Opportunity has failed to produce any reports showing whether companies owned by minorities and women have been hired for the 1,410 productions that have been granted tax breaks for spending more than $500 million on Illinois vendors that cover the gamut from caterers to hardware stores to security companies.
And legislators have gotten only spotty information from the state agency on the number of women and minorities who’ve landed behind-the-scene jobs with the productions that have secured more tax breaks by paying $634 million to Illinois workers — from actors on the hit TV show “Chicago Fire” to extras working on a blockbuster movie like “Transformers 3.”
For the first three years of the law, the Commerce Department didn’t give legislators a single report showing whether the film tax credits had created jobs and business for minorities and women. Then, the agency started sending reports on the number of jobs production companies planned to give minorities and women — but didn’t tell legislators how many actually ended up getting hired.
Now, the state is giving legislators reports that show the number of jobs filled by Illinois residents, but it’s often years after the movie, TV show or commercial has been aired and the company has gotten its tax breaks. And the state agency doesn’t identify the productions that employed those people.
The data also don’t reveal how long any of those jobs lasted — a day, a week or a month — or whether they were entry-level or management positions, though the law requires such reporting.
For instance, a quarterly report that legislators got last fall shows minorities got 31 percent of the 2,626 crew jobs held by Illinois residents. But it notes that many of those jobs were filled by the same people hired for multiple productions. That makes it impossible to determine exactly how many minorities and women were hired.
“Why won’t they show you the numbers? I think they would be embarrassed by the numbers,” says former state Sen. Rickey “Hollywood” Hendon, D-Chicago, who sponsored the Illinois Film Production Services Tax Credit Act of 2008.
“I know the numbers on the vendors aren’t good,” Hendon says. “Bringing the film industry back to Chicago should have helped people of all colors. I felt if we’re going to bring an economic boom to Chicago, we should make sure the jobs trickle down to minorities and women.”
The Illinois Film Office boasts that this is the only state with a film tax-credit program that requires companies to make a “best-faith effort” to hire a diversified workforce behind the cameras and to hire vendors owned by women and minorities. There’s no specific requirement that a particular number of minority employees or companies be hired.
State officials won’t say whether they’ve ever rejected an application for film tax credits for any reason.
“You can’t get the tax credit unless you verify that you’re spending money with black folks, Hispanic folks and women — it’s that straightforward,” says former state Rep. Ken Dunkin, D-Chicago, who sponsored the tax-credit law in the Illinois House.
“Who are you spending your money with? Is it the same clique of white men?” Dunkin says. “Why the state of Illinois isn’t reporting this is perplexing to me. It’s negligence — and them not doing what the hell they are supposed to be doing.”
Under governors Rod Blagojevich and Pat Quinn, Commerce Department staffers never collected data to show whether production companies do business with companies owned by minorities or women, according to an Illinois auditor general’s report in April 2015, three months after Gov. Bruce Rauner took office.
The state still isn’t collecting the data, though Rauner’s administration says it plans to give legislators a better picture on women and minorities working on productions that get the tax credits.
“We started implementing a corrective action plan in September that will ensure more accurate reporting of the growing and diverse film industry in our state,” says Illinois Film Office spokeswoman Jacquelyn Reineke. “The diversity standard we employ sets Illinois’ film program apart from the rest of the country, and we continue to look for new ways to reach out and utilize the talents of minority vendors.”
A few states, including Wisconsin and Michigan, have stopped offering film tax credits. Illinois is one of 34 states that give tax breaks to lure companies that produce TV shows, movies and commercials. The program began under Blagojevich in 2004, as the state was losing TV and film work to other states and Canada.
Illinois gives production companies a 30 percent tax credit on goods and services bought from vendors in the state — anything from the cost of parking on the street to the hotels where people are put up to studio space at Cinespace Chicago Film Studios — along with salaries paid to Illinois residents, up to $100,000.
They can get an extra 15 percent credit by hiring people from neighborhoods with high unemployment.
A production company has to hire an accounting firm to certify the expenses, but there’s no indication state officials independently verify the expenses.
Production companies have two years to submit their final paperwork for a tax credit. Most end up selling the credits to brokers or companies that can use them to cut their Illinois taxes.
“The remarkable thing about these tax subsidies is they rely upon information from the people who received the tax break or the people who are giving it,” Michael Thom, an assistant professor of public policy at the University of Southern California, author of a study last summer questioning the economic impact of tax breaks for the film industry. “There’s never any audit.”
Illinois has doled out more than $330 million in tax credits to 1,410 productions that spent more than $1.1 billion in the state since 2008, state records show. The largest credit — $11.5 million — went to the company that produced the sci-fi film “Divergent.” The smallest — $4,817 — went to Northfield’s Towers Productions for a TV pilot called “Earth Uncensored.”
Filmmaker Spike Lee’s company, Da Chi-Lite Joint, Inc., got a $3.4 million tax credit last August for “Chi-Raq,” the movie about Chicago gang violence that drew the ire of Mayor Rahm Emanuel when it was filmed here in 2015. Lee sold the credits last October to Apple.
Lee reported spending $10.9 million in Illinois during 28 days of filming. State officials refused to release records showing expenses Lee claimed to get the credit. They say a production company’s financial information can’t be disclosed under the law — a position upheld last summer by Illinois Attorney General Lisa Madigan.
Lee’s application estimated his movie would cost $19 million and minorities and women would get 33 percent of the jobs on his production crew, 50 percent of those in his production office, 75 percent of the acting jobs and 95 percent of those for extras. State officials won’t say whether he met those goals.
Lee spent several days at St. Sabina Church on the South Side. He filmed a scene inside the church, held a casting call there and used the church property to feed the cast and crew, according to the pastor, the Rev. Michael Pfleger.
“They did give a donation to the church for when they were filming here,” Pfleger says, declining to say how much money the church received.
Illinois film officials won’t say whether Lee’s film tax credits included a location fee for St. Sabina. Lee didn’t respond to emails.
Illinois officials haven’t always refused to release records showing expenses claimed to get the film tax credit. In 2015, the Commerce Department provided the Sun-Times with documents from 10 shows, including the “Chicago Fire” pilot and “Transformers 4.”
The expenses included leasing Cinespace studios, a West Side facility that has gotten state grants and tax breaks worth $21 million; hotel rooms, including more than $400,000 spent by “Transformers 4” at Trump International Hotel & Tower; and thousands of dollars in groceries and restaurant meals, including fast food. It’s unclear how much of that was spent with companies owned by minorities or women.
None of the records identified the race or gender of the Illinois residents hired as actors, extras, office workers and crew members.
The state says it released the records on “Chicago Fire” because NBC Universal hadn’t asked that those remain confidential.
Dunkin says he can’t explain why legislators allowed the commerce agency to skip the minority-reporting requirements that minority legislators demanded when they approved the tax-credit program, which runs until 2021.
“It’s embarrassing for me not to be able to answer that question,” says Dunkin, who lost a re-election bid last year. “Shame on us. I, along with other members, went to sleep on that. I’ll take the hit on that. We should have caught them and stayed on them . . . Our concern was the spend and getting black folk involved.”
Contributing: Jacqueline Campbell