Puerto Rico: The New Hollywood

Baghdad war zones. Brazilian slums. Even cookie-cutter American suburbs. They’ve all been recreated in Puerto Rico, which increasingly is becoming a backdrop in American and European cinema. Rarely does the island play itself on the silver screen. But in recent years, the territory has provided dramatic land- and seascapes for productions starring some of Hollywood's biggest names, including George Clooney and Johnny Depp. Television productions are also finding a temporary home here. HBO's dark comedy series "Eastbound & Down" and the Italian miniseries "Angels and Diamonds" recently were filmed in Puerto Rico. HBO's crime drama "The Wire" shot a memorable sequence in the scenic seaside slum of La Perla.

Sure, the Caribbean island has an array of beaches, rainforest, desert-like ranges, colonial streetscapes, flashy resorts and gritty ghettoes. But Hollywood has been attracted, first and foremost, by tax incentives that are among the most generous offered by any U.S. jurisdiction.
Star-struck politicians in the U.S. territory have been eager to dangle big tax breaks and other incentives in a feverish bid to lure a film industry that is being similarly courted all over the world and has grown accustomed to shopping around for the best deal.

"Tax-credit programs have become the determining factor in deciding where to shoot, and ours is very aggressive," said Mariella Pérez Serrano, the island's film commissioner. "The more they spend in Puerto Rico, the more they get back."

The stakes are high for Puerto Rico as the struggling U.S. territory grapples with a 16 percent unemployment rate, higher than any U.S. state. Officials hope that the film industry will boost the economy with more infusions of cash and jobs.

Even though tax credits have been offered to movie makers since 1999, Puerto Rico has just started fully capitalizing on its proximity to the film industries in the U.S. mainland and Europe by aggressively marketing the credits. It's paying off. In 2000, just one movie was shot in Puerto Rico, generating less than $1 million. In 2009, nine movies generated $57 million. So far this year, seven films have been shot and there are more in the pipeline, but confidentiality agreements with the studios prevent local officials from identifying them.

Puerto Rico refunds up to 40 percent of a film studio's expenditures during a shoot, transforming movie making into one of the few bright spots in an otherwise tough local economy. To tap into the island's program, the government requires that at least 50 percent of principal photography be shot on location or $1 million has to be spent hiring local crew and contractors. Shooting on government properties is free of charge.

Movie making can be a flavor-of-the-moment business, so when Puerto Rico Governor Luis Fortuño signed a law last year extending the 40 percent tax credit for film productions until 2019 he stressed his government was "committed to turn the island into one of the most important film industry destinations." Producers praise Puerto Rico's crews and the film commission's cooperation, even if shooting in the territory comes with its own brand of logistical headaches for big studio movies and TV series. The absence of a soundstage is the biggest problem.

Anibal Melendez, the mayor of the northeast coastal city of Fajardo, said husband-and-wife pop stars Jennifer Lopez and Marc Anthony hope to turn a sliver of his municipality into a movie making hotspot. Whether a soundstage will be built in Fajardo is far from certain, however, and publicists for the couple — who teamed up for a movie on Puerto Rican salsa legend Héctor Lavoe in 2006 — declined comment.

Economists in Puerto Rico say luring the movie industry to Puerto Rico is helping ease the U.S. island's grinding four-year recession, but they also warn that permanent tax breaks can end up being more of a crutch than an incentive. "It is a good idea to attract stateside movie makers to the island, but our end goal should be to develop good local productions that can play around the world and make money for local talent," said Juan Lara, a leading economist on the island.

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