The 5th meeting of the Interim Joint Committee on Economic Development and Tourism was held on Thursday, October 21, 2004, at 1:00 PM, in Room 149 of the Capitol Annex. Senator Katie Stine and Representative Eddie Ballard, co-Chairs, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Katie Stine, Co-Chair; Representative Eddie Ballard, Co-Chair; Senators David Boswell, Julie Denton, Brett Guthrie, Alice Kerr, Vernie McGaha, and Richard Roeding; Representatives Royce Adams, Perry Clark, C.B. Embry Jr., Bill Farmer, Mary Harper, Dennis Horlander, Thomas Kerr, Stan Lee, Thomas McKee, Ruth Ann Palumbo, Tanya Pullin, Ancel Smith, John Will Stacy, Charles Walton, Mike Weaver, and Robin L. Webb.
Guests: Dr. James Owens, Chair, Department of Communications Arts, Asbury College; Secretary James Host, and Todd Cassidy, Director, Kentucky Film Commission, Commerce Cabinet; Mark Jeffrey, General Manager, Griffin Gate Marriott Resort; Elaine “Cissy” Musselman, Chair, Greater Louisville Convention & Visitors Bureau; and Marcheta Sparrow, President and CEO, Kentucky Tourism Council.
LRC Staff: John Buckner, Committee Staff Administrator; Karen Armstrong-Cummings; Lou Pierce and Dawn Johnson.
Representative Ballard asked for a motion to approve the minutes of the August 25 and September 16 meetings. Motion was made by Senator Boswell, seconded by Senator McGaha and approved by voice vote.
Representative Ballard welcomed Dr. James Owens, Chair of the Department of Communications Arts, Asbury College to discuss Asbury's involvement in television and film. Dr. Owens began, stating the media communication program which began in 1982 offers six areas of study: production, media performance, film studies, media management, multi-media, and music recording.
Dr. Owens said initially that Asbury had no idea that students could compete nationally and internationally in the media. They developed a model, innovative at the time, that was a mix of theory, classroom experience and practical experience with 75 percent of experience being in the classroom and 25 percent being practical application in the field. He stated that in the last 10 years over 400 Asbury students have worked for networks throughout the United States and Canada, making them highly competitive in the job market. Asbury students have also been involved with the Olympics--a story that has been covered in various newspapers. After a stint with ABC Sports in 1980, Dr. Owen stated he realized how much experience and knowledge he had gained in just 16 days. The college decided to use this as a model to give students a condensed education and so began pursuing the Olympics. Since then, students have been involved in six Olympics. Since 1984, Asbury College has been the only school invited to participate outside the Olympics' immediate area and they have been invited to the upcoming Turin and Beijing Olympics as paid employees. Since 2002, the International Olympic Committee has asked Asbury College to be responsible for training all student staff that will be working as paid broadcast personnel at the Olympics. During the Olympics in Salt Lake City, Utah, 600 students were trained and 1,200 in Athens, Greece.
Another area the students are involved in is international travel with nonprofit agencies, Dr. Owens said. Beginning in 1983, Asbury College students began helping nonprofit agencies through promotional and training material to be used in their respective countries.
Dr. Owens said film studies is a new area for the department. Originally, they did not want to go the direction of film. He said the college continues to attract students who come to Asbury because of the quality of the education but who ask for film study. Dr. Owens explained that, approximately seven years ago, Asbury joined several other campuses and a satellite campus in Los Angeles because they felt Kentucky was missing a "film culture" and because there was a lack of productions in the state. During a student’s junior or senior year they spend a semester in Los Angeles interning with major studios.
Dr. Owens explained that Asbury is offering several new classes in film, story telling, directing, feature film productions and NHDTV.
Dr. Owens said Asbury has approximately 1,250 students; 26 percent from Kentucky and 74 percent from 40 different states and ten countries. He noted students are interested in working in Kentucky but there is not a large media core in the state. Dr. Owens pointed out that Asbury graduates work at companies such as CNN, National Geographic, ESPN and NASA, just to name a few.
Dr. Owens told the Committee the question to ask is what can be done by schools for the film and television industry in Kentucky. He called on some graduates in Los Angeles to get an idea. One is to provide production assistance. He pointed out that film production companies are interested in the local pool of help--the more workers brought into the state, the more expensive a project will be. He noted Asbury students have been involved in almost every film in Kentucky in the last ten years. Secondly, film companies need props. Since Kentucky does not have a large enough market for “prop houses” companies turn to schools. He said some schools can also provide facilities and equipment. Asbury has some of the highest level television equipment so some television production companies, such as NBC, have rented equipment from the college when they are shooting locally.
Dr. Owens said that to encourage the film and television industry, the state can partner with colleges by helping fund programs and helping to create a pool of crafts people, although this is a long term goal. Also, Asbury is exploring a new project for the Governor’s School for the Arts--a film program at the college where 30 high school students could study film for a month. Another way to help would be to partner with colleges to create projects for the state. Asbury is currently working on two projects: one with NASA and UK documenting the Mars Probe, and creating three five-minute videos to be used for gun safety for Department of Justice. Dr. Owens said the college is being paid the amount of a normal production company. The advantage, he said, is the retainment of two graduates and many students, and Asbury has purchased the equipment to be used on these and future projects. Dr. Owens said it has been a good cooperative venture.
Senator Boswell asked if Asbury had any prerequisites before working on a film to avoid stereotyping Kentuckians Dr. Owens said no, but they hoped they could have as good an influence as possible, but scripts are not reviewed to prevent stereotyping and noted that it is a risk.
Senator Stine stated she thought it very important for the Committee and the executive branch to be aware of the work at Asbury College. She noted that when a film is made in Kentucky, not only is money spent during filming but they also leave tourist attractions. Senator Stine asked if Asbury College was agreeable to contacting some of its graduates to identify what else the state can do to become more business-friendly in the film industry.
Senator Stine asked Dr. Owens to elaborate on the term “film culture” used earlier. Dr. Owens explained that he wanted students to understand that the laid back approach at Asbury College is significantly different than the industry in areas such as California. He noted the film industry is so small that very few people are hired which creates a very competitive market.
Representative Pullin asked if any graduates had gone on to become industry lawyers. Dr. Owens said a couple at least.
Representative Pullin asked how much Asbury was involved in Christian broadcasting. Dr. Owens said when the program was initially started, the thinking was a majority of students would go that direction but in the last 15 years only about five percent of graduates go into Christian media.
Senator Guthrie noted that Wilmington, North Carolina was a popular filming location and asked what the area did to achieve this. Dr. Owens replied that from a university standpoint they were able to attract approximately $25 million and build their own back lots and prop areas which then served their students as well as film companies. He stated Asbury does this on a smaller scale but they are dealing with a substantially smaller budget.
Representative Embry asked how students are recruited to the Asbury film program. Dr. Owens replied that the department's website, which was designed by students, draws more students than anything. He said the college also gets a lot written about them due to their unique situation, especially with the Olympics coverage.
Representative Horlander asked about Asbury College’s plans for the future. Dr. Owens said two years ago the administration thought the Communication Arts Department had gotten too big so enrollment was limited, creating a long waiting list of students. The board of trustees reviewed the decision and reversed it. He said the biggest problem is lack of space. Currently, a $10 million facility is planned for the future but Asbury is still trying to raise the necessary funds, which is hard for a small private college.
Representative Adams asked about the length of the Olympic contracts. Dr. Owens replied they are currently verbally contracted through the Beijing Olympics.
Next, Senator Stine introduced Secretary James Host and Todd Cassidy, Director of the Kentucky Film Commission, Commerce Cabinet.
Secretary Host said the film industry is important to the future of tourism in Kentucky. He explained that since the amount of state funding for tourism is the same as in 1968, the state needs more exposure with the same amount of money. He said the film industry is one way to achieve this. Films such as Seabiscuit, Dreamer and Elizabethtown attract a lot of people to Kentucky without the state spending anything, the Secretary explained.
Secretary Host covered several points that were of interest to the Committee in previous meetings. He noted that in 1994, the Legislative Research Commission recommended there be a central reservation system in Parks. Although adopted a few months ago and having been online only two months, to date 2,089 rooms have been booked online creating $160,000 of revenue. Of those booked, 40 percent were Kentuckians, the rest included 37 states, the District of Columbia, three Canadian provinces and two European countries. Secretary Host noted this was achieved without any promotional money.
Secretary Host explained that outdated furnishing in the parks are being replaced by using savings accrued in other areas. He noted that Kincaid Lake State Park Golf Course is now open. He said the Capitol Annex cafeteria has made up a $200,000 deficit within the last six months and will soon be renovated using the increased funds. The Health and Human Services building cafeteria, taken over by the Cabinet in February, now has a net income of $40,000 due to better food and service. He noted that the Transportation Building cafeteria income is also increasing.
Secretary Host said the state took over Murray State University’s native American archeological site, cleaned it up, and made it the 11th state historic site.
Secretary Host explained that new controls have been implemented regarding ProCards. The Department of Parks credit limit was reduced from $8.1 million per month to $534,000 per month, and the number of cards from 1,200 to 135 per month with a net savings of $465,000 in the first quarter of fiscal ’05 while purchasing the same items.
Secretary Host pointed out that The Great Getaway Guide, which promotes tourism in Kentucky, previously was printed in Florida at a cost of $285,000 with the rights to sell all advertising and keep the revenue given to the printing company. He noted the Department of Parks was printing a separate travel publication for $90,000, with both publications totaling $375,000. The printing was bid in Kentucky saving $45,000 on the printing cost and $213,000 in was received in ad revenue.
Secretary Host said the branding program would help eliminate the stereotyping of Kentuckians. He stated the Governor will announce the rollout of the branding initiative next Tuesday at the Governor’s Conference on Tourism. He stated, in the past, $14 million was spent in this endeavor through federal funds for the Justice Cabinet and Transportation Cabinet and forestry service funds for the Environmental Protection Cabinet for a combined savings of over $2 million which will go back in to branding and additional promotion. The Commerce Cabinet is working with the Farm Bureau, Kentucky Chamber, AIK, etc. on the branding initiative, the Secretary said. The new brand will be trademarked and used for merchandise, which will create a revenue stream to further promote Kentucky.
Senator Boswell complimented Secretary Host on his work and stated there needs to be some form of control on the impact of the surrounding states' expanding gaming opportunities, and he hoped that the Commerce Cabinet would come up with a plan.
Representative McKee complimented Secretary Host and asked where the Cabinet stands on the issue of recreational vehicle (RV) campground reservations. Secretary Host replied that their next project will be creating a campground reservation system. Unable to make reservations, a lot of people visit other states that take reservations, therefore, state campground use is down 35 percent.
Secretary Host noted there is no computerization of food and beverage sales at the state parks. The state will receive an 800 percent return once this is done. He noted that all state parks have inefficient electric grills which cost a lot to run. Now, after agreements with propane providers, utilities with drop dramatically once gas grills are installed.
Secretary Host pointed out that every Parks superintendent must have prior hotel or restaurant industry experience.
Senator Denton thanked Secretary Host for addressing the issues with E.P. "Tom" Sawyer Park. She said the park has been very neglected. Tennis championships have been lost and she stated funds that are needed to make money with the state parks.
Senator McGaha said there is a need for expanding the Activities Center at Lake Cumberland State Park. He stated money was provided in the 2000 budget for architectural drawings. The drawings are done but now bonding is needed for completion. Senator McGaha said the manager of the park stated he turned away 250 meetings last year. The Secretary replied that this is one of the items on the budget capital request. He stated that, until then, thorough cleaning of park facilities is paramount.
Referring to RV campgrounds, Representative Adams stated it is very important to solve the reservation issue, especially areas near interstates. Secretary Host stated that in the proposed budget there is an appropriation, particularly in the severance tax counties. The campgrounds are in such disrepair and outdated that people turn around and leave when they stop, said the Secretary. He pointed out that the Kentucky Horse Park, which has updated, adequate facilities is full to capacity every weekend.
Representative Adams added that with the tobacco buyout, therefore, a lot of people seeking jobs. Secretary Host added that, with the buyout, the Cabinet is going to focus on agritourism. They are now working with the Secretary of Agriculture to appoint a director of Agritourism using the Tobacco Development Fund.
Representative Webb noted that several campgrounds in her district remain relatively full and improvements have been made through the years, especially in Carter Caves and Grayson Lake. She said she would like to maintain the overall mission, the environment and character of the park and she will assist in any way to achieve this. Secretary Host stated he is willing to work to ensure these goals are achieved.
Referring to the film industry, Secretary Host stated "Elizabethtown" spent $3.2 million in production costs in Kentucky: $40,000 for one week in Versailles and $100,000 in Louisville. $400,000 was spent on hotel rooms. Secretary Host said total expenses for "Dreamer" are yet to be determined but the location fees in Lexington exceeded $100,000 and room expenditures have exceeded $200,000. He stated these are examples that the film industry is a good investment for the state. He said Kentucky can and should be a major player in the business. Secretary Host then deferred to Todd Cassidy, Director of the Kentucky Film Commission.
Mr. Cassidy stated he has been with the Film Commission for a year. He said the Commission wants to be the best in the country. He stated the film industry does more for the economy than people realize. Referring to a copy of the PowerPoint presentation included in the members' folders, Mr. Cassidy reviewed how the film industry affects Kentucky's economy, the incentives offered by Kentucky, and a comparison to other states' incentives.
Referring to New Mexico's 50 percent wage reimbursement for residents receiving on-the-job training, Senator Stine asked if this is done through the universities or through walk-ins. She said it might be more beneficial to work through the universities. Mr. Cassidy replied it can be done either way. University students interested in the film and also local union members or employees who have worked in the positions can be trained for higher level positions.
Mr. Cassidy pointed out that ten weeks of filming for "Dreamer," a movie portraying Kentucky, was actually filmed in Louisiana because of their incentives. The difference in filming there was $1.5 to $2 million.
Mr. Cassidy said Kentucky has the qualities to attract production companies, but in order to become competitive, the state must become competitive in offering financial inducements to the film industry. Secretary Host added that a lot can be done with a little in promoting the film industry in Kentucky. He then offered that the Cabinet staff come back before the committee later with suggested plans. Senator Stine said this is agreeable to the Committee.
Next, Senator Stine introduced Mark Jeffrey, General Manager of Griffin Gate Marriott Resort and Elaine "Cissy" Musselman, Chair of the Greater Louisville Convention and Visitors Bureau. Mr. Jeffrey began by saying films add to the four objectives of the Marriott: providing a great workplace, taking good care of customers, providing a profit for owners and being a community leader. He noted they had over 4,000 room nights sold during the filming of "Dreamer," generating $150 per room equaling $600,000 in revenue. He stated hotels work very hard to find groups to come to Kentucky and the film industry is great for the hotel industry.
Ms. Musselman said, as Chair of the Visitor's Bureau, the film industry has a huge impact on economic development and, with the leadership of Secretary Host and the upcoming session of the General Assembly, Kentucky can become first in attracting film producers. She noted this is a different kind of economic development-- it represents "clean" development. Producers leave each community in the same or even better condition. She said this is not only a national but more a global competition with Canada being a significant player. She said state incentives are critical, and without them, Kentucky cannot compete. In talking with producers working in Kentucky, the top areas lacking are a significant soundstage, the current incentive program, lack of tax credits for films investors, and the need for vendor tax rebates.
Senator Stine noted that at the Kentucky Tourism Council conference next Tuesday, the Governor would unveil his "branding" initiative. Senator Stine said it was important for Ms. Marcheta Sparrow, President and CEO of the Kentucky Tourism Council (KTC) speak to the committee today.
Ms. Sparrow said the KTC has been in existence for 25 years and is the statewide association for Kentucky's tourism businesses. Their mission is to unite Kentucky's tourism industry through legislative and governmental interaction, industry awareness, advocacy, professional development, and communication. KTC has 460 member businesses throughout the Commonwealth. KTC is governed by a 30-member board. Ms. Sparrow noted that the Council works hard in communicating with state government partners. She said the private sector of the tourism industry is intertwined with public sector tourism in federal and state recreation areas and parks. She said, unlike other industries, tourism is affected greatly by the strength or lack of marketing by state government, therefore they work with them to strengthen those areas.
Ms. Sparrow said the Council's most successful partnership to date has been the Kentucky Tourism Industry Annual Conference. She said that the Tourism Council took over the conference 20 years ago when the state decided not to be involved in meeting planning anymore. The Council produces the conference while state government sets the program and chooses speakers. They also partner with the Kentucky Hotel and Lodging Association. Ms. Sparrow noted that the Governor would be speaking at this year's conference.
Ms. Sparrow stated that although marketing is left primarily to Council members and state government they do have some programs that they take great pride in. In 1996, their website was the first statewide tourism website to be launched. The site is highly visited by potential tourists and industry. She state this year the Council participated in The Great Getaway Guide with the Commerce Cabinet by selling advertising. KTC also prints the Travel Values Book. Their newest venture is the Meeting Planners' Guide to Kentucky which was designed to market Kentucky's small and medium-size meeting sites. She said it will be distributed to 6,000 meeting planners across the country. Ms. Sparrow said the KTC is always available help the Committee anyway possible. Senator Stine thanked Ms. Sparrow and asked that the Committee members and LRC be included on KTC's mailing list.
Senator Stine asked about the make up of the KTC. Ms. Sparrow said they represent everyone, with the largest employer being the Galt House and Schneider Properties in Louisville. They also represent a large number of hotels and everything down to the smallest museum.
Senator Roeding asked about the board membership saying that many boards and commissions do not adequately represent the state and that Louisville and Lexington have a disproportionate number of members. He asked to see a membership list. Ms. Sparrow replied the KTC is a private sector association with the board being elected by the membership. She stated they do have representation from every region and she would supply a copy of the membership. Senator Roeding asked if the Council received any state funds. Ms. Sparrow said that they did not because KTC is a private organization.
Representative Clark asked how much the state budgets for tourism. Ms. Sparrow said she was not sure of the total, but it was approximately $1 million for advertising. Secretary Host said that $2 million for budgeted for media and promotion, $800,000 for matching funds, $2 million for personnel, travel shows, international offices, etc. was budgeted Representative Clark asked what would be the return on money spent for advertising and developing tourism. Secretary Host replied every dollar spent, $30 is received in return. Representative Clark said during budget considerations, increasing tourism dollars should be given priority. Secretary Host added that before any more money is spent, the legislature should understand what it is being spent upon and work with the Commerce Cabinet on incentives that can be provided with the same amount of money in order to maximize the amount being spent. Secretary Host added that they are going to take most of the $2 million traditionally spent in out-of-state advertising, put it into matching funds with the new branding exercise, and place it in each of the regions based on needs research.
There being no further business, Senator Roeding's motion to adjourn was seconded by Senator Guthrie and approved by voice vote. The meeting adjourned at 3:10 p.m.