When N.C. Couldn't Sweeten Deal, the Mouse Walked

Savannah, Ga., is getting its own economic stimulus this summer, courtesy of Mickey Mouse.

Walt Disney Pictures is filming "The Last Song," written by North Carolina author Nicholas Sparks, in the city by the sea. Savannah leaders expect the movie to give an $8 million boost to the local economy.

Then there's the Miley factor. Teen sensation Miley Cyrus, best known as her character Hannah Montana on The Disney Channel, will star in the film, drawing fans to the region. Then-Gov. Mike Easley signed North Carolina's film incentive into law in August 2006.

It all could have come to North Carolina.

Wilmington was the preferred location for the shoot, and state leaders, after almost three months of negotiations, came within five minutes of making it official. The deal fell apart over a $125,000 disagreement with the state's tax collectors, causing North Carolina workers to miss out on as many as 500 summer jobs, costing state businesses as much as $17.5 million in movie-related revenue and prompting a public misstep for Gov. Beverly Perdue.

Records just made public by the N.C. Department of Commerce at the request of The News & Observer reveal the tension between the business interests and creative demands of major motion pictures. They also show the large role that incentives now play in filmmaking and the pressure on leaders -- who last week slashed the tax bill to bring Apple to North Carolina -- to keep up.

What about Wilmington?

At 11:34 a.m. Jan. 26, Aaron Syrett, director of the N.C. Film Office, made a note in his files:

"Met with Mary Ann Hughes at the Sundance Film Festival. Disney has Untitled Nicholas Sparks Film slated to star Miley Cyrus. Wants Wilmington and in-depth conversations about incentives."

Syrett knew Hughes from his days as film commissioner in Utah. Disney filmed about 30movies there and he dealt regularly with Hughes, whose job is to reduce production costs by maximizing incentives.

From the start, expenses were a focus. Georgia and North Carolina were the best fit, but location scouts also went to Michigan. A March trip there was cut short because it was 13 degrees, snowy and windy, according to the Commerce Department records.

Wilmington made the most sense because "The Last Song," like many of Sparks' works, is set on the North Carolina coast.

"I had a nice conversation today with Dara Weintraub," one of the movie's producers, Bill Vassar wrote March 5 in an email message to Syrett. Vassar manages EUE/Screen Gems Studios' Wilmington complex.

"She said, 'the story takes place in Wilmington and we want to be there,'" Vassar wrote.

Disney spokeswoman Heidi Trotta said the company doesn't talk about production finances. But Commerce records make clear that financial considerations were complex.

Housing costs in Savannah were about $1.1 million more than in Wilmington, in part because Disney would have to bring people from North Carolina to work on the film. But Georgia has a better film incentive than this state.

The Georgia Legislature in 2008 raised the credit for movie companies, giving back as much as 30 percent of money spent in Georgia on fuel, catering, compensation and other costs. North Carolina refunds 15 percent.

That meant, despite the higher cost of housing, Disney would spend about $1 million less in Georgia. Officials with the company suggested they would still come to North Carolina if the state could cut that gap by roughly half, according to the Commerce Department records.

Syrett consulted with his bosses at Commerce and with staff in the Governor's Office on where to get the money. They considered a grant from a fund that Perdue controls, or Golden LEAF, the foundation that oversees about $600 million in public money intended for economically distressed areas. Neither of those options was viable.