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Streaming Giant Expands Operations in the Duke City
Many businesses have, understandably, struggled under New Mexico’s increased COVID restrictions. One business that has been working hard at making a comeback is the film and television industry. According to the New Mexico Film Office, “direct spending” in state from the industry hit a record $525.5 million in 2019. Needless to say, that number has taken a catastrophic dip in 2020. One of the major companies working hard to get up and running again by employing strict new health regulations on set is Netflix Inc. This week the City of Albuquerque, the State of New Mexico, Netflix and Mesa del Sol announced an agreement that, if approved by the City Council, will expand the corporation’s occupation of the old Albuquerque Studios out at Mesa del Sol. The project got its first official go-ahead on Monday morning when two local tax districts approved legislation enabling Netflix taxes to fund new infrastructure needed for the massive new complex.
“Netflix is at the cutting edge of the film and television industry, and it’s an honor to welcome them to New Mexico,” said Governor Martinez of the deal. “After years of hard work to cut taxes and make New Mexico business-friendly, we’re seeing incredible results. Now, New Mexico is leading the nation in economic growth and lowering unemployment and we’ve brought the world’s leading internet entertainment service, Netflix, to our state.”
The deal promises $1 billion in new Netflix spending over the next 10 years, “in addition to” the $1 billion announced in 2018. To facilitate this, Netflix will be relocating its entire global production headquarters to Mesa del Sol. Netflix is also tapped to buy 170 acres in Mesa del Sol’s Innovation Park immediately adjacent to ABQ Studios (which Netflix purchased for $30 million back in 2018). It will lease an additional 130 acres from the State Land Office, making for a total 300-acre expansion. This will allow Netflix to more than double New Mexico filming capacity over the next 10 years. Netflix has already used ABQ Studios as a base to film many of its stream-at-home hits, including the sci-fi series “Daybreak,” the Western drama “Godless” and the currently lensing Idris Elba feature The Harder They Fall.
The Netflix deal will be financed by a half billion dollars in Industrial Revenue Bonds issued by the city on Netflix’s behalf. (See sidebar.) In lieu of taxes, Netflix will pay the city a single lump sum. Through an agreement with special tax districts at Mesa del Sol, Netflix taxes will fund the additional cost of new roads, water and infrastructure, ensuring other taxpayers don’t foot the bill. In addition to the $500 million in IRBs the city is ponying up, the State of New Mexico will provide up to $17 million in state LEDA (Local Economic Development Act) funding, and the City of Albuquerque will commit up to $7 million in local LEDA funding, including $6 million in infrastructure in-kind. In exchange Netflix agrees to “commit to film and television production totalling $1 billion in the State of New Mexico, with a minimum of 70 percent to be spent in Albuquerque,” according to a UNM Bureau of Business & Economic Research report. From the looks of it, New Mexico’s reputation as a movie-making powerhouse is about to experience a major boom.
Back in 2018 the state and city offered $14.5 million in incentives to lure Netflix to the Southwest: $10 million from the state and $4.5 million from the city. These numbers were based on Netflix’s promise to spend $1 billion locally over 10 years and to hire 1,000 workers annually. In 2019 the company exceeded its first-year goals by spending $150 million and hiring 1,600 workers, according to the state’s Economic Development Department.
A joint City of Albuquerque-UNM study of that first 2018 $1 billion Netflix deal found that Netflix could average more than $27.63 million in wages and $24 million in local spending annually. That would generate $2.4 million in new taxes for the city, on top of creating local work opportunities that keep thousands of local residents here in our state.
Though final details of the new agreement had not been released by the city by press time, residents can reasonably expect that an additional $1 billion in spending could have a similar impact to the 2018 numbers. According to that UNM study, the majority of film crew members hired are “technical trade workers who hold positions in set, electric, grip and construction departments and typically make a higher average wage than that of similar occupations in other industries.” These are what the film industry calls “below-the-line” workers, skilled trade laborers and union workers. To build a truly self-sufficient film industry in our state, more work needs to be done to create “above-the-line” workers—that is to say, local writers, directors and producers who have the power to generate their own projects within the state. Nonetheless, the addition of more below-the-line workers is valuable to New Mexico. UNM’s positive study concurs, stating that, “The film industry builds solid middle class jobs, where carpenters can earn $25/hr instead of $18/hr in other industries, painters can earn $28/hr instead of $16/hr, and tailors and dressmakers earn $25/hr instead of $11/hr.”
Netflix presaged this bump in employment back in January when the company announced a partnership with NBCUniversal and the state of New Mexico to launch a training program for production jobs to serve New Mexico’s growing film industry. Netflix and NBCUniversal pledged to each donate $55,000 per year over the next decade to support the program, officials said at the time. And with Netflix moving its international headquarters (currently in Los Gatos, Calif.) to Albuquerque, we can reasonably expect more employment opportunities in management, office work and the all-important post-production sector (sound recording, special effects, color correction, editing, etc.)
“Albuquerque would not have been able to meet the needs of Netflix if it wasn’t for the incredible work by countless individuals over the years who laid the groundwork to build this industry,” Mayor Tim Keller said after signing the bill that would seal the deal. “With our natural beauty, climate, culture and great people, the rest of the world is starting to notice our unmatched competitive advantages. Our city now has new, high-paying job opportunities to look forward to.”
Alicia Keys, head of the city’s Film Office, also weighed in. “This partnership with Netflix solidifies Albuquerque’s role as a hub for film, a process that has been years in the making,” she said. “Our local businesses and crews will feel the effects of this deal for years to come.”So while the ink dries on this multimillion-dollar deal and our state labors to get COVID under control, keep an eye out for more movies and TV series shooting in and around the Duke City. [ ]