News Story

Another Film Subsidy Failure

Michigan 3D media company, Speedshape, paid by taxpayers to help make Spy Kids 4, owes taxes and rent

A media company that was paid using $1.8 million from taxpayers thanks to Michigan film incentives in 2011 to do post-production work for the movie Spy Kids 4 looks to be out-of-business and has left a series of unpaid bills behind.

Speedshape was trumpeted as a company that would use "Michigan-based talent" while doing the work on the movie, according to a March 31, 2011, press release from the Michigan Film Office. The Weinstein Co. paid Speedshape $4.5 million and was reimbursed for $1.8 million by the Michigan film tax incentive. 

However, Speedshape hasn’t paid $20,296 in personal property taxes that was delinquent from July and December 2012, according to the Oakland County Treasurer’s Office. The company had its Michigan headquarters in Bingham Farms. Officials from Bingham Farms said they couldn’t get in touch with Speedshape officials and the Oakland County Treasurer’s Office received notice of the delinquent taxes in March.

Linda Uribe of JFK Investment, the management company that leased the office space to Speedshape in Bingham Farms, said the company vacated its office in November 2012.

"They did not keep up on their lease payments and they eventually left the suite," Uribe said. "It was a large loss for JFK, but the landlord did not pursue legal action."

The phone number listed on Speedshape’s website was no longer taking messages. Emails sent to the company’s founder, Oivind Magnussen, at his Speedshape email address were not returned. The company's Facebook page has been removed and its Twitter and YouTube pages have not been updated since last summer.

Katelyn Bogacki, a Weinstein Co. spokeswoman, didn’t respond to a request for comment.

The work Speedshape did for Spy Kids 4 involved 3D graphics. News reports stated that the 3D division of Speedshape was started only weeks before accepting the contract from the Weinstein Company.

Joan Fabiano, founder of Grassroots in Michigan, which believes in limited government and Constitutional principles, said she is bothered that the film was not shot in Michigan yet still received film subsidies.

"You should [at least] have to make the film here in Michigan," Fabiano said. "If you make it here in Michigan, wherever the film crew is, they will take advantages of businesses in that area. They have to be fed, they may hire extras.

"It could encourage fraud. These companies get the money. They might not pay their taxes and then run off to who knows where to start again," she said. "What's to prevent that from happening in the future? What's the reason Michigan does this in the first place? No. 1 is to get publicity in Michigan and No. 2 is it helps the local economy. None of that is going to happen. The film has to be made in Michigan. If that is not in the law, then it has to be amended to make sure it is filmed in Michigan."

Michelle Begnoche, spokeswoman for the Michigan Film Office, said the film office's commitment was to the applicant, not the vendor.

"A thorough audit review was completed confirming expenditures related to this project prior to the incentive being dispersed," Begnoche said. "It is unfortunate that Speedshape has closed its doors in Michigan. However, be assured we are continuing our efforts to attract and grow digital media projects, including post-production, video game development and mobile apps here in the state."

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.