LOS ANGELES (AP) — In the old days, filmmakers flocked toHollywood for its abundant sunshine,
beautiful people and sandybeaches. But today a new filmmaking diaspora is spreading across theglobe to
places like Vancouver, London and Wellington, New Zealand.Fueledby politicians doling out generous tax
breaks, filmmaking talent ismigrating to where the money is. The result is an incentives arms racethat pits
California against governments around the world and allowspowerful studios —with hundreds of millions of
dollars at theirdisposal— to cherry-pick the best deals.The most recent iterationof the phenomenon came
earlier this month when James Cameron announcedplans to shoot and produce the next three "Avatar"
sequels largely inNew Zealand. What Cameron gets out of the deal is a 25 percent rebate onproduction costs,
as long as his company spends at least $413 millionon the three films."There’s no place in the world
that we couldmake these sequels more cost effectively," says producer Jon Landau. Itis neither the
archipelago’s volcanoes nor its glaciers that areattractive, because the "Avatar" movies will be
shot indoors. Sure,Peter Jackson’s award-winning special effects infrastructure is there,but the deciding
factor was the money. "We looked at other places," saysLandau. But in the end, "it was this
rebate."In exchange, thelocal economy will benefit hugely, Landau says, comparing the rippleeffect to
the boost that comes from new home construction. "We’re doinglumber, we’re catering for hundreds of
people a day. We’re housingpeople in hotels. We’re going to a stationery store and tripling theirbusiness in
a year."The deal was "the best Christmas present wecould have possibly hoped for," says Alex
Lee, an Auckland, NewZealand-based entertainment lawyer. The news is especially welcomebecause the local
screen industry is facing a potential drought: TheStarz pay TV series "Spartacus" finished this
year and Peter Jackson’s"The Hobbit" trilogy is set to wrap next year. Thanks to the
"Avatar"sequels, the 1,100 workers at Weta Digital Ltd., the ground-breakingdigital effects house
Jackson co-founded in 1993, can keep plugging awaythrough 2018."It would have been a real shame if we
had lost anyof that talent and they had to move to follow the films," saysWellington Mayor Celia
Wade-Brown.Driving the trend are powerfulglobal forces squeezing the entertainment industry. Falling DVD
salesare putting pressure on movie-making budgets, while the demand forever-more-amazing special effects
grows. The spread of technology andskills around the world is creating a huge number of special
effectssuppliers — some using cheaper labor than can be found in Hollywood.Governmentlargesse has helped
create mini-moguldoms in Vancouver, Montreal,London, New York and Wellington, all of which are
aggressivelyone-upping each other to become the next new hotbed of activity. As thework spreads, branch
offices of visual effects companies have opened upin new locations. Even though digital work is borderless,
workers mustlive and be paid locally to generate the income taxes and spending thatgovernments seek.The tax
incentives race is destined toaccelerate next year. State incentives in California — home to
"StarWars" pioneer Industrial Light & Magic — are too small toaccommodate big-budget
movies. Democratic Assembly member Raul Bocanegrais preparing a bill to expand their scope, but it could
take months toget through committees, says his chief of staff, Ben Golombek.Andthe U.S. federal incentive,
an arguably difficult-to-use tax deductionof up to $20 million per film or TV episode, is set to expire at
the endof 2013."Once our federal incentive ends in two weeks, you’regoing to have a lot of people who
are going to go elsewhere," says Hal"Corky" Kessler, a tax incentives lawyer with
Chicago-based Deutsch,Levy & Engel.Industry business leaders say they’re simply following the
money."Thisis no different than any other multinational business," says SirWilliam Sargent,
co-founder and CEO of Framestore, a London-basedspecial effects business that worked on likely
Oscar-contender,"Gravity," and has offices in Montreal, New York and Los Angeles. "We’rejust
going to where our customers are."Even if the U.S. moves tocounteract growing incentives overseas, the
efforts won’t preventanother jurisdiction from offering a bigger break.JosephChianese, executive vice
president at consulting company EP FinancialSolutions, says the competition to offer attractive incentives
isintense. More than 30 countries and 44 U.S. states now offer tax breaksto filmmakers.The mix "changes
daily, but it’s not going away,"Chianese says. "We have now trained a generation of filmmakers and
TVmakers that production doesn’t have to happen here anymore."___Perry reported from Wellington, New
Zealand.Copyright 2013 The Associated Press. All rightsreserved. This material may not be published,
broadcast, rewritten orredistributed.