Hollywood moves to New Mexico

Several years ago, the New Mexico State Investment Council launched an investment program to lure filmmakers to the state. Now the program is expanding – and financing stars like Pierce Brosnan and Liam Neeson. By Paul Fruchbom.

In the world of multi-billion dollar state pension funds, the board meeting agendas of the New Mexico State Investment Council stand out. You see, the $12.9 billion (€10.6 billion) SIC, is in the movie business.

Beginning several years ago, the Private Equity Investment Advisory Committee of the SIC began financing independent movies, low-budget films and television shows in order to lure Hollywood filmmakers to the “Land of Enchantment”. In return, the filmmakers would agree to shoot on location in New Mexico and use New Mexican laborers. In addition, the SIC receives a percentage of the production’s profits after break-even costs are realized, typically around 10 percent.

The total amount the Council may invest in these projects is 0.5 percent of the Severance Tax Permanent Fund, an endowment fund established in 1973 to receive taxes collected on natural resources extracted from New Mexico – as of November 30, 2005, that translates into a total pool of $191 million. Since the beginning of the program New Mexico has provided approximately $107 million worth of loans for 12 different productions. According to the Council’s estimates those projects have used 1,587 New Mexican crew members and spent $71 million in the state.

A selection of productions partially financed by the program include Blind Horizon, a film starring Val Kilmer released as a Showtime original movie; Suspect Zero, a movie about a serial killer hunting other serial killers starring Aaron Eckhart, Ben Kingsley and Carrie-Anne Moss that did not have a successful run in the theaters; and Wildfire, a television show about a girl on a horse farm that was the number one show on ABC Family last year.

The state has yet to see any real profits from the program, but the SIC has recently made an effort to lure bigger (and perhaps more profitable) productions to New Mexico. The Council recently doubled the maximum amount that could be loaned to any one film, from $7.5 million to $15 million.

Which is why the following item appeared on the agenda for the board’s meeting last October: a discussion and vote on an investment in Seraphim Falls. Seraphim Falls, a movie produced by Mel Gibson’s Icon Productions, stars Pierce Brosnan and Liam Neeson as two Civil War officers on opposing sides of the conflict. There was no discussion in the board meeting as to which actor would play the Union officer and which would play the Confederate, nor why two US soldiers are being portrayed by Irish actors. However, there was discussion about the film’s “soft R” rating and the benefits that would accrue to the film’s 297 crewmembers, 263 of whom are from New Mexico.

Even if these new bigger films don’t perform as expected, the board members seem to feel that the economic benefits are worth the cost. As one Council member recently stated, “Even if these pictures are bummers, we gain the economic development value of having these productions take place in our state.”

The SIC’s commitment to the state, however, run deeper than simple moviemaking. The pension fund has also started the New Mexico Private Equity Investment Program, which allows the Investment Council to commit more than $200 million to private equity investments with ties to New Mexico.