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Hibbing’s favorite filmmaker haunt. Credit: Company website

Last June, I wrote about The Harbinger, the first (and, to date, only) movie filmed at Ironbound Studios in Chisholm. At that time, the production was experiencing cash flow issues. What had originally been planned as a $2 million project had gone $500,000 over budget. Checks written to the crew began to bounce a couple of weeks before shooting wrapped. Director/Producer Will Klipstine was scrambling to to get everybody paid.

On the positive side, The Harbinger was certified to receive a $500,000 Snowbate credit from the state, a program which reimburses filmmakers up to 25 percent of costs incurred in Minnesota. As soon as the producers could show that the cast and crew had been paid, and produced receipts verifying their Minnesota spending, they would get the rebate. Klipstine hoped to borrow money from a lender, pay off the crew, collect the Snowbate, and use that to pay off the lender. When we spoke in June, a lender had not yet jumped aboard this financial merry-go-round, and Klipstine sounded more than a little frazzled.

Today, things seem to be looking up. When I spoke with Will on Jan. 28, 2019, he sounded considerably more upbeat than he had eight months earlier. “We got the loan after going through three different lenders," he said. "We thought we were going to be closed in June, [but] it took till Aug. 29 to close on that loan, and it was the most stressful three months of my life. You know, people on the crew, we’re talking 324 people, crew, cast, vendors, just constant, daily emails and phone calls and texts: ‘Where’s my money? What’s going on? What’s your ETA?’ You know, all that stuff. People accusing me of being a criminal, or trying to swindle them. And I’m like, I swear to God, I’m just trying to figure this out.”

Crew members themselves made securing the loan more difficult. “Some of the loans fell through because the crew actually leaked it to the lender that they were threatening litigation … Somebody from the crew went to the lender and said, ‘Hey, we’re going to sue them unless you give them the loan and make the loan happen faster.” And the lender’s like, ‘F that. I’m out.’ … So the lender just dropped us … Lenders don’t want to hear that … So I’m thinking, what are you guys doing? We’re trying to pay you back, and you guys are killing our loans. And it happened with two different lenders … So I just said, hey, look, if you really want to get paid back, you need to stop talking to the lenders … so then we were able to finally get the loan … We were able to pay everybody off … like, 457 grand worth of [paychecks and bills].”

Now they’re just waiting for the Snowbate money to come through, which Klipstine expects will happen before the end of February. The Minnesota Film and TV Board, which oversees the Snowbate program, is reviewing receipts to verify money spent in Minnesota. Klipstine isn’t worried that they’ll meet the $2 million threshold.  “I think we really boosted the economy in the Chisholm and Hibbing and Virginia area. We probably spent a couple million dollars [just] on the Iron Range … There’s dozens of examples of local businesses that were getting business from December to June … We spent more than $50,000 at this one restaurant in Hibbing alone between December and June. It was called Boomtown. The people loved going to Boomtown, and we just kept going to Boomtown.” 

He laughed. “Of course, now we’re out of money, so we can’t really edit the film … The three producers put all our money that we made on this movie right back into the movie, so we didn’t get paid … To pay us, and to cover post-production, would be [another] 500K.”

Special effects, music and sound are incorporated into the film during post-production. Splice is a Minneapolis-based production house that Klipstine said has already made a “semi-rough assembly” of the film. They will finish the work when more funding comes through. 

Will didn’t seem too concerned about attracting investors for the post-production phase. “The main thing you want to do when you make a film is have production value. That starts with the acting, and of course the cinematography, and the lighting, and you’ve got to have great sound …  Everything about the film is what I wanted it to be, from a production-value standpoint … I don’t think we’re really going to have much of an issue finding funds for post and/or distribution.”

“Sizzle reels” are short demo videos that are meant to build interest in a movie. Klipstine is shopping around two Harbinger sizzle reels to prospective investors. Though they are not publicly available, I did have an opportunity to watch them. To my untrained eye, the production value seemed solid. I didn’t see any microphones hanging in the frame. It looked like a real movie.

Will estimated that it could be up to two years before the movie is finally released. “We just arrived at this step [of securing Snowbate]. We had to slay one dragon at a time, and the first dragon, of course, was to get everybody paid.”

I pitched him a softball. “Was it a learning experience?”

He laughed. “Oh, hell yeah.” 

Film Board lobbying efforts

Between 2013 and 2018, the Minnesota Film and TV Board paid out $20 million in rebates for 32 feature films, 39 TV shows and documentaries, and 189 commercials shot in the state.

Wilson, a 2017 Woody Harrelson comedy, received the most Snowbate—about $1 million. This was followed by The Harbinger ($500,000) and Over There, a World War I movie that is currently in post-production ($390,000). Strange Nature, an indie horror film about mutated frogs directed by Duluth native Jim Ojala, secured about $24,000. (I derived these estimates from the Film Board’s website by calculating 25 percent of each project’s certified cost.)

Before states offered rebates, Canada did. In the 1980s, Canada began to offer generous incentives to filmmakers, which drew a lot of movie business away from the United States. American lawmakers noticed this and decided to compete. In 1992, Louisiana became the first state to offer movie rebates. A mad rush ensued as other states joined in. By 2009, the height of the rebate era, 44 states, plus Washington, D.C. and Puerto Rico, were offering some sort of incentive to filmmakers.

Over time, support for these programs waned; in a number of states, they disappeared. Today, 31 states offer movie incentives. Georgia is the heavy hitter, with 30 percent rebates, unlimited sales tax exemptions, and no cap on the amount of money it will spend. (I was told that some of the Harbinger crew members spend their winter months working on movies in Georgia.) Louisiana is also a powerhouse, allocating $150 million in movie rebates to qualified projects annually.

In Minnesota, the Snowbate coffers are empty, victim of diminishing legislative support. Film Board Executive Director Melodie Bahan is lobbying the Legislature to fund the program with $10 million during the upcoming legislative session, returning it to its level of a few years ago. In addition, she hopes the Legislature will approve a tax credit incentive for moviemakers. When I spoke with her on Jan. 23, she said the tax credit “would allow us to compete for the larger-budget films and television series projects.”

When I asked what she thought her prospects were, she laughed. “I think they’re fantastic! You know, I’m realistic, but I’m also very optimistic, because I really think that we have so much to offer … I feel like if we are just given the opportunity to make our case and really show legislators and the public the benefits that will come to the state, not just economically, but in terms of tourism and civic pride and all of that, we should be successful.”

IRRRB movie fund

Film incentives aren’t completely absent in Minnesota. One incentive that has reappeared on the scene is a fund established by the Iron Range Resources and Rehabilitation Board (IRRRB) in 2012. The IRRRB collects a taconite production tax from mining operations and uses the money to diversify and assist the economy of the Iron Range. In 2012, the IRRRB established an $800,000 Film Production Incentive Fund for people making movies on the Iron Range. (When Ironbound Studios opened in Chisholm in 2014, one of their big selling points was the IRRRB incentive.) However, the program never found many takers, with less than $200,000 being doled out to movies over the years. By 2017, the program had lapsed.

Now it’s back. For 2019, the IRRRB is funding a revamped Film Incentive Pilot Program at $250,000. Unlike in the past, when the IRRRB administered the program, the new program will be administered by the Film Board. “We’re so thrilled about that,” Melodie Bahan told me. “It launched at the beginning of [January, and] is now up and running. Funds are available.” The program offers 20 percent rebates to movies shot on the Iron Range. This will be in addition to any statewide incentives approved by the Legislature.

When I mentioned the pilot program to Will Klipstine, he was enthusiastic. “Good. Glad to hear it … I think we are one of the reasons for that … Hopefully they boost that 250K, because that’s not as much as it sounds, but still, it’s something … If the government was able to see the boost that we gave the economy [while filming The Harbinger], I think they would approve more rebates without blinking.”

The IRRRB will evaluate the pilot program at the end of the year to determine if it should continue.

Economic impact of the LSMR

The slow-rolling controversy over the city’s proposed removal of the Mud Lake causeway continues. As readers are aware, the city would like to remove the causeway and open the waters of Mud Lake to the St. Louis River at large. Members of the Lake Superior and Mississippi Railroad (LSMR), which uses the causeway for an excursion train, are strongly opposed.

On Feb. 7, 2019, the Friends of Western Duluth Parks and Trails (FWDPT) and members of UMD’s Labovitz School of Business held a press conference at Duluth City Hall to unveil an economic impact study on the Lake Superior and Mississippi Railroad. This is the first such study ever done. The FWDPT and LSMR hope its findings will highlight the importance of the LSMR and encourage the city to look at solutions to preserve the causeway.

In 2018, the train attracted about 6,000 riders, two-thirds of them from outside the city of Duluth. Using surveys that were handed out on the train during 2018, the study estimated that the train’s riders spent about a combined $1 million during their time in Duluth. This included restaurant meals, hotel stays, gasoline purchases, visits to other attractions, and so on. If the city eliminated the causeway (by far the train’s most popular and scenic feature), the study estimated that ridership and economic impact would drop 40 percent, to $600,000. If, on the other hand, the city kept the causeway, and built a trail to accompany it (the “Rail with Trail” option), the study estimated that economic impact would increase 20 percent, to $1.2 million.

The LSMR is a smaller operation than the more well-known North Shore Scenic Railroad downtown; it also consumes fewer city resources. Volunteers have maintained the tracks, staffed the rides, developed the narrations, and promoted the excursion, with little help from the city, for 38 years. If the city is realizing a $1 million annual economic benefit from an operation without putting much into it, that may seem like a fantastic deal for the city. But the city has been steadfast in its determination to remove the causeway for a long time. Time will tell if the economic impact study changes that.

The city is currently working to coordinate a “super-meeting” among the Heritage Preservation Commission, the Planning Commission, the Parks Commission, and other decisionmakers to hash out the issues surrounding the train and the causeway. No date is set, but I have been told that they are tentatively looking at meeting in late March. Whether such a meeting will produce useful direction or confusing bedlam remains to be seen.

Those interested in further research may find the LSMR Economic Impact Study online at z.umn.edu/bber.