Netflix Fort Monmouth studio could win big under new NJ film tax law

TRENTON - Netflix is in line to receive millions more in financial support from New Jersey if it makes good on its plan to build a giant production studio at Fort Monmouth.

Gov. Phil Murphy on Thursday signed a bill that increases the amount of tax credits available to Netflix and other movie and television producers. And it allows the New Jersey Economic Development Authority to provide financial help to production companies' facilities.

“The closing of Fort Monmouth was a devastating economic blow to our region, but Netflix's project promises to provide a tremendous economic boon to our local economies,” state Sen. Vin Gopal, D-Monmouth, one of the bill's sponsors, said in a prepared statement. "Netflix has committed to developing a state-of-the-art production facility on the fort’s campus in Monmouth County, creating both permanent production jobs as well as construction jobs, not to mention benefiting local merchants, entertainment venues and restaurants.”

The legislation expands tax credits for an industry — film and digital media — that has been a focus of Murphy's plan to improve the state's innovation economy. The governor also signed legislation Thursday that will give the state's first offshore wind project, Ocean Wind 1, access to federal tax credits.

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Expansion of the film and digital media tax credit comes as Netflix, the Los Gatos, California-based streaming company, won a bid to build one of the world's biggest film production studios on the site of the former Fort Monmouth Army post. Netflix has yet to close on the sale of the property and has asked for more time to complete its due diligence.

The bill, also sponsored by state Sen. Paul Sarlo, D-Bergen, was approved last week by the Senate by a vote of 33-1. It was approved by the Assembly, 63-13.

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Among its provisions:

• The New Jersey Motion Picture and Television Development Commission, which oversees the program, will be folded into the New Jersey Economic Development Authority.

• The EDA will make $250 million in tax credits each year available to production companies, up from $100 million.

• The EDA will make $400 million available each year to companies it designates as "studio partners," up from $350 million. Studio partners are defined as owning a production facility in New Jersey that is at least 250,000 square feet for at least 10 years. New Jersey in December designated Lions Gate in Newark as its first studio partner.

• The bill appropriates $30 million for the EDA to make capital investments in film production facilities. The EDA can't spend more than $10 million per project.

• The money comes from unused funds in the “Aspire Program Act” and “Emerge Program Act,” two other economic incentive programs offered by the EDA.

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'They should not need state subsidies'

The bill drew the ire of New Jersey Policy Perspective, a left-leaning research group, that said it would cost the state $200 million and subsidize an industry that already is profitable. Netflix, for example, reported net income of $4.5 billion in 2022.

Moreover, the group said, the bill allowing the EDA to make capital investments could make the state a financial partner in an otherwise privately funded development.

"If these ventures are profitable, then they should not need state subsidies," the group said in a report. "If they are not profitable, the state should not be propping them up and liable for losses if the studios fold."

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$650M spent by film companies in NJ

Murphy has targeted the movie and digital film sector since he took office in 2018 as part of what he said was his bid to improve the state's innovation economy. He restored expired film tax credits and eventually expanded on them.

Production picked up; last year film companies spent more than $650 million in New Jersey, up from $500 million in 2021, according to the New Jersey Motion Picture and Television Commission.

And the state nabbed a potential blockbuster. Netflix said it would buy 300 acres at Fort Monmouth for $55 million and build an $850 million production studio that would include 12 sound stages.

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The bill's supporters said New Jersey needed to expand its film tax credits to keep up with California and New York. And they noted Netflix faces a lengthy due diligence phase before it closes on the Fort Monmouth property.

The company said in May it needed more time to complete title searches, surveys, traffic mitigation, environmental testing, plan its energy and power sources and emergency services arrangements.

Michael L. Diamond is a business reporter who has been writing about the New Jersey economy and health care industry for more than 20 years. He can be reached at mdiamond@gannettnj.com.

This article originally appeared on Asbury Park Press: Netflix Fort Monmouth studio could get millions from NJ film tax law