SOUTH PORTLAND — No lights, no cameras, no action.

Less than three years after signing a potential 15-year lease for the former South Portland Armory on Broadway, Cape Elizabeth resident Eric Matheson has pulled the plug on the Fore River Sound Stage.

“We are packing up now,” Matheson said Monday. “We will be out in three months.”

City Manager Jim Gailey said the lease was terminated by mutual agreement last week.

“I loved the concept, I was always a supporter of Eric and his group to move forward. It is unfortunate we were not going to be able to make that work,” Gailey said.

Matheson said he was grateful for Gailey’s support, but he could not attract companies to use the armory largely because the state does not provide the economic incentives for production companies found in other nearby states, including Massachusetts.

“Jim Gailey supported us right down the line,” Matheson said, “but we don’t have the capital. We lost investors.”

The five-year lease signed in 2011 included options for 10 more years, charged Matheson a base rent of $550 per month, and offered the city a 40 percent share of his sublease revenues that could also have paid for repairs to the 73-year-old building.

A city application for a $100,000 Community Development Block Grant to spruce up the armory facade was rejected by the state in 2011. The grant would have been combined with city funding from the tax increment finance district around the Mill Creek Hannaford Bros. store.

Gailey said he will speak with city staff and councilors about the future of the armory, bought by the city in U.S. Bankruptcy Court for $650,000 in 2006. He said he favors putting it up for sale.

A portion of the armory is used by the South Portland Fire Department for vehicle maintenance, but won’t be needed after a new Public Works facility is completed off Highland Avenue.

Inside, the armory offered open space two stories high, thousands of square feet to build smaller sets, prop and costume storage rooms, and editing facilities.

But aside from local photo and video shoots, the largest substantive project to use the armory came during post-production for the suspense film “Backgammon,” shot in Cape Elizabeth in 2011 by Utah-based Fischer Productions.

The film cost about $1.2 million, a pittance compared to what Matheson said could be possible if the state matched what Massachusetts offers production companies.

“We have been fighting that same battle for well over 20 years,” Matheson said about trying to get companies a 25 percent tax break for projects in Maine.

Matheson said the lack of capital prevented him from upgrading heating and plumbing in the building. A crowd-funding effort to pay for roof repairs was successful, but he and his investors decided against making the repairs because production companies were not renting the facility.

“A lot hinged on the tax credits,” Matheson said.

Matheson had a local ally in state Rep. Scott Hamann, the Democrat representing House District 123 in the city and Cape Elizabeth.

Hamann submitted a bill offering income tax credits of 25 percent for production companies spending at least $1 million in Maine and providing employment for at least 10 residents. The credit would have been increased to 35 percent for productions costing more than $100 million.

The bill passed in the House of Representatives, but was rejected twice in the Senate and will not be reconsidered during the current legislative session.

A Jan. 21 news release from the Maine Film Office said 16 productions were certified by the office in 2013 – twice the number of productions in 2012 – and brought in an estimated $4.7 million in spending by production companies, or more than three times the spending the previous year.

While some scenes from the 2010 mystery “Shutter Island” were shot in Bar Harbor and Acadia National Park, the last large-scale production fully made in Maine was the adaptation of Richard Russo’s novel “Empire Falls,” released in 2005.

Matheson said more incentives will mean more money spent.

“If it happens, I can see a lot of jobs for a lot of people,” he said.

With more than 40 years in the film industry, including set and special effects work on “Blown Away,” “The Pink Panther II,” and “Amistad,” Matheson said he can find work.

But it may be about two hours away, at the former Fort Devens outside Boston, where the 18,000-square-foot New England Studios opened last fall.

David Harry can be reached at 781-3661 ext. 110 or dharry@theforecaster.net. Follow him on Twitter: @DavidHarry8.

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The South Portland Armory will be mostly vacant by spring after Fore River Sound Stage owner Eric Matheson and City Manager Jim Gailey agreed to terminate a five-year lease for the production company. Matheson said a lack of state tax incentives makes it difficult to lure film production to Maine.

The lights will soon go dark in the South Portland Armory, where Fore River Sound Stage owner Eric Matheson has closed the film and sound production facility.

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