Auditors from the state comptroller’s office have found that the Tennessee Film, Entertainment and Music Commission, the Dept. of Economic and Community Development and the Dept. of Revenue have “failed to ensure that public incentives for film-making businesses were properly administered.”
According to a release from the comptroller’s office:
“Auditors could find little to no evidence the incentives have led to new film producing facilities or permanent film jobs in Tennessee. In 2006, the General Assembly passed laws giving the film commission authority to provide certain financial incentives to attract movie production companies to the state. However, auditors questioned whether the incentives provided have been properly determined and whether certain incentives intended for film-making facilities located in Tennessee have been improperly awarded to out-of-state businesses. The Comptroller’s report, which was released today, can be found online here.
The auditors found that incentive payments were based on expenditures that did not always meet the program’s guidelines or have adequate supporting documentation. The audit also revealed a former executive director had a potential conflict of interest that was not properly disclosed. The former director’s spouse worked for a legal firm that was involved with at least three film projects which received incentives.”
Regarding whether incentives had been awarded improperly to out-of-state businesses that were still claiming the headquarters credit, the audit found an array of problems.
In three instances, letter rulings were issued to production companies that did not yet have physical facilities in the state but were promising to do so.
Some of the participating production companies are no longer at the locations used to receive the headquarters incentives. The report found one production company rented temporary office space from a local company that specializes in temporary and virtual office housing. In another case, the incentive was sent directly to a separate California-based production company at the direction of the documented headquartered producer.
And several of the production companies approved for the headquarters incentives were dissolved after completing their film projects in Tennessee.