Furor over subsidized music studio plan

Austin (KXAN) - Some local businesses want the City Council to stop the Austin Film Society from giving taxpayer incentives to an out-of-state competitor.

This Thursday, the Council will decide whether to allow the Film Society, which manages some city-owned property, to sub-lease to a Tennessee music business.

For 18 years Danny Cabela's company Music Lab has been serving the Austin Music Industry. He's spent more than a million dollars building his multi-use music studios in South Austin.

After surviving years of ups and down of the Austin economy, he doesn't understand why the City is considering subsidizing an out-of-state competitor at Austin Film Studios.

Danny Cabela, owner of Music Labs says, "It will make it a lot more difficult to compete."

 

That competitor is Soundcheck. A company in Nashville that provides rehearsal space and gear for musicians.

Cabela says allowing Soundcheck to set up on city-owned land would give them a competitive advantage over local companies.

"Their operating costs will be a lot lower than ours. There's no property taxes cause thats city land. The utilities are a different rate because of city owned property. So those two things alone, which are very high, are cost issues for this company," said Cabela.

According to the Austin Film Society's website, if Soundcheck takes up residence at Austin Film Studios, companies that offer the same services won't be able to lease there.

Cabela says, "I think we'll lose a lot of business. I think a lot of Austin companies will lose a lot of business."

That's not the only thing that will be lost if the Council approves sub-leasing stage 4 to Soundcheck. It's one less stage available to filmmakers.

Cabela says that doesn’t make sense. "They are shutting down the biggest stage, so I don't know that creates more space for movies. Stage 4 is the biggest stage out there and that's being shut down to bring in Soundcheck."

When Prop 4, which funded facilities, including the Austin Film Studios was passed in 2006 there were five stages available to filmmakers. If Soundcheck comes in, there will be three. That works out to 47% less square feet of production space.

John Pritchett, Oscar-nominated sound mixer, says film space is scarce and with new film incentives passed by the legislature, Austin needs all the production space it can get.

"It has the potential to be discouraging to anybody who wanted to come to town to work on pictures. We need some stage space," said Pritchett.

But according to the Austin Film Society's executive director, the stage 4 isn't as desirable to filmmakers.

Testifying before the Austin City Council on June 18th , Rebecca Campbell, Executive Director of the Austin Film Society said, “It's been empty for a year and it's in the past two years hasn't pulled in enough rental dollars to even pay the overhead that it takes up.”

However, when KXAN went to Austin Studios last week, we found stage 4 is currently being rented and receipts show that in 2008 it was rented for four months at $8,500 a month.

The Texas Film Commission says having Stage 4 available for film production greatly increases the value of the other stages. Not only because it adds more production space. It provides a working space for people renting the other studios.

The Austin Film Society's executive director says there's plenty of available space for filmmakers in warehouses in and around Austin.

"Austin Studios was never supposed to be the only one stop shop in Austin. And it’s part of the economic development that facilities elsewhere might get some business. For example, you could go up to look at Omega Broadcasting and they've got a 16,000 square foot hanger that’s just waiting to be rented. You can go out toward Bastrop and look at Spiderwood Studios. And hopefully, we are looking at them getting some overflow business going to them," said Campbell.

 

It's important to note that there are a number of people who support the deal with Soundcheck. Others said they might become supporters if more information was made public.

The Austin Film Society says it’s their policy to keep such deals confidential.

Because the property involved is owned by City of Austin and taxpayers have already funded more than six million dollars in improvements, KXAN asked to see the terms of the lease. While the City was willing to release the contract with the rental amounts redacted, the Austin Film Society objected and asked the Texas Attorney General for permission to withhold the information.

The City leases the 20 acre property at the old Mueller Airport to the Austin Film Society for $100 per year. In exchange, the Society is supposed to use any income from the property to make improvements and promote filmmaking in Austin. In June, the City voted to extend the agreement until December 2042.

Any lease that includes more than $50,000 in improvements must be signed off by City Council. The deal with Soundcheck will include $975,000 in improvements. The Austin Film Society will pay for $475,000 of that via a low interest loan. Soundcheck will fund the balance.

If approved, the deal will give Soundcheck a five year lease with the options of renewing for another ten years. It will pay an undisclosed amount of rent, but will not pay property taxes because the land is owned by the City.

The City Council will decide whether to approve the sub-lease at this Thursday's City Council meeting.