It is a nondescript office building, flanked by construction equipment on a side street in downtown Ann Arbor. The first floor directory mainly lists doctor’s offices, and only after climbing a set of bland, white stairs does it start to look like you might be in the right place. The second floor is just a long hallway, with temporary, printer-paper signs noting crew and director’s offices taped near the outside of each closed door.

But the company that has taken over the second floor of that building will be pumping millions of dollars into the state and local economy over the next few months. Its payroll includes a two-time Academy Award winner. And just one year ago, it had no intention of bringing its business to Michigan.

The movie “Betty Anne Waters,” starring Hilary Swank, will start its seven-week shoot in Ann Arbor on Feb. 17, though its production crew has been in the area since November and will likely stay until the end of April. The film is one of many that have flooded into the area in recent months, thanks to the passage of the Michigan Motion Picture Incentive Program. And with much of Michigan’s economy continuing to crumble, the face of the state’s quickly growing film industry may start to look less like short-term, converted offices and more like a Midwestern Tinseltown.

BIG REBATE, BIG NAMES

The Michigan Motion Picture Incentive Program took effect April 1 after passing unanimously in the House of Representatives and 37-1 in the Senate. It states that a film that spends at least $50,000 in the state can receive up to a 40 percent tax credit on Michigan cast, crew and production expenditures (with the exception of out-of-state crew members) and an extra two percent rebate if the film is set in one of 103 “core communities,” including Ann Arbor. The program is one of the most aggressive in the country to date.

With the auto industry floundering and an estimated $1.5 billion budget deficit heading into the new year, Michigan may not seem in the position to offer up to a 42 percent tax rebate to film companies that won’t be permanently funneling revenue into the state. But proponents of the program say it’s a way for Michigan to quickly diversify its economy in a time when revitalization is badly needed.

According to Jim Burnstein, vice-chairman of the Michigan Film Office Advisory Council, film revenue was about $4 million in Michigan the year before the incentive was passed.

In just nine months after the initiative was enacted, the state earned an estimated $100 million in production revenue, Michigan Film Office CEO Tony Wenson said.

“The film business is one that you can see immediate results — and we are,” Burnstein said. “Since the law was passed in April, it’s the equivalent from going from 0 to 100 miles an hour.”
After the initiative passed, Michigan played host to movies ranging from big-name blockbusters like Clint Eastwood’s “Gran Torino” to indie films like “Cherry,” filmed on the Kalamazoo College campus. And the names of actors and actresses who filmed in Michigan read like a guest list at an A-list Hollywood soiree.

Diane Lane. Drew Barrymore. Christina Ricci. Adrien Brody. Kim Cattrall. Sean Astin.

But Michigan isn’t alone in luring stars and film equipment away from Los Angeles. Michigan’s initiative followed similar plans in states like Louisiana and New Mexico, which both have 25 percent tax credit programs and are considered to have two of the country’s most successful fledgling film industries. Louisiana served as the backdrop for 80 films in 2008.

Before tax credit programs were implemented, the high cost of filming made it difficult for independent producers to shoot in the United States.

Producer Philippe Martinez said he often filmed in Canada and Eastern Europe because of the lower cost of production. But Martinez set up shop in Grand Rapids from August to October to shoot the $4.8 million thriller “The Steam Experiment,” a story about a scientist (Val Kilmer, “Alexander”) who takes six people hostage in a steam room until the local newspaper agrees to print his global warming theory.

Now, with multiple states offering tax rebates, there are more opportunities to shoot in the United States but the difference between states’ rebate percentages is minimal when deciding on a location, Martinez said.

“It’s not like, ‘How much would I save compared to another state?’ ” he said. “It’s more like you don’t even come to the state, as an independent producer, shooting somewhere where there’s no tax breaks.”

Even with bigger-budget and less price-sensitive movies, choosing a state in which to film requires a mixture of what makes the most economic and creative sense. Producer David Permut had two films slated for production in early 2008 — the $60 million film “Youth in Revolt,” starring Michael Cera (“Nick and Nora’s Infinite Playlist”), and “Prayers for Bobby,” a Lifetime movie starring Sigourney Weaver (“WALL-E”).