The operator of a sound stage in South Portland says Maine’s lack of tax incentives for filmmakers has prompted him to give up his lease in a high-profile public building and seek a new location for his business.

“I have been beating my head against the wall with this state for 25 years, and I am pretty much done with it,” said Eric Matheson, founding partner of Fore River Sound Stage, which is housed in the city-owned South Portland Armory.

In 2011, Matheson signed a five-year lease, with options for an additional decade. The lease was terminated by mutual agreement Jan. 31.

The city acquired the former National Guard armory at the foot of the Casco Bay Bridge in 2006. The building remained vacant until Fore River Sound Stage moved in just over 2½ years ago.

Matheson has to be out of the building by the end of April. South Portland will weigh its options after that, said City Manager Jim Gailey, who described the lease termination as amicable.

Matheson is now packing his gear, which he plans to put in storage until he sorts out his options. In the meantime, he will take his services to Massachusetts, where he has worked on film crews for many years.

He paid the city $550 a month to rent the building, which essentially amounted to a storage fee. There’s no heat or hot water in the building, which the city bought for $650,000.

The sound stage hosted a dozen or so productions over the two-plus years. Matheson’s biggest project was the film “Backgammon,” which was shot in Cape Elizabeth but based out of the sound stage.

Last year, the Maine House passed a bill that would have offered a refundable income tax credit of as much as 25 percent for major movies. The measure failed in the Senate by two votes.

A revised version of the bill was proposed as emergency legislation for this year but was rejected by the Legislative Council, which screens requests to introduce bills in the second year of each legislative session.

Rep. Scott Hamann, D-South Portland, who wrote the rejected bill, L.D. 1409, said Friday that he will work with his colleagues to draft a bill that will pass in both houses. He hopes to introduce it next year.

“Between now and next term, I am going to continue to work with people in the film community, filmmakers, crews, filmmakers out of state and film offices around the country, to see what’s working,” he said.

The film community has tried for years to improve the state’s incentives to draw more high-profile films to Maine.

The state offers film, TV and commercial production companies that spend $75,000 or more as much as a 12 percent rebate on wages paid to Maine residents who work on a production, and a 10 percent rebate for nonresidents’ wages.

Hamann’s bill would have increased the rebate to 25 percent, which would have matched incentives in film-friendly states like Massachusetts, Pennsylvania and North Carolina, as well as the Canadian Maritimes.

Movie production incentives vary by state, and range from tax credits and exemptions to cash grants, breaks on fees and refunds for production-related expenses.

Generally, tax credits remove a portion of income tax owed to a state by a production company if the company meets minimum spending requirements. Proponents say the credits lead to job creation and tourism. Opponents say they rob the state of tax revenue.

The Maine Film Office certified 16 productions in Maine in 2013, which amounted to more than $4.7 million in direct spending by film and TV production companies. That represents significant growth over 2012, when eight certified productions generated $1.5 million in direct spending, according to film office data.

Hamann said he and Sen. Linda Valentino, D-Saco, will write a bill to address critics’ concerns. Specifically, it would require filmmakers to apply to participate in the incentive program. That application process would include a script, a budget, a statement of economic impact and the tax credit requested. The Maine Film Office would vet applications based on tax credits available in a given year.

The bill also would include a mechanism to measure the success of the incentive program so the state could evaluate its benefits and costs on a yearly basis, Hamann said.

He said he is confident that a revised bill will pass.

“A lot of people in the film community were simultaneously disappointed and surprised that (the bill) got so close” last year, he said. “It got a lot closer than similar bills have done in the past. We’ve learned from past bills, and are weeding out the things that were not effective but expensive. We’re trying to create a new industry in this state.”

But that’s too little too late for Matheson and Fore River Sound Stage.

The armory needs work now, and he cannot afford to invest in the building without feeling confident that he can attract business, he said. Films will not come to Maine if the state doesn’t offer tax incentives comparable to those in nearby states, he said.

“We’re going to move on because we can’t operate here. We don’t have the financing to put in heat. We don’t have financing to fix the roof, and we don’t have financing because we do not have tax incentives in the state of Maine. Our financing hinged on the incentives,” he said.

“Scott’s bill was a very good bill,” he said. “It’s too bad for Maine.”

Bob Keyes can be contacted at 791-6457 or at:

bkeyes@pressherald.com

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