Subsidies

The Movie Flop That Sank a Michigan Town


Jimmy Lifton, left, with Gary Burtka closes the clapboard slate signifying that the studio is a done deal on August 27, 2009 in Allen Park, Mich.

Photograph by Ricardo Thomas/Detroit News/AP Photo

Jimmy Lifton, left, with Gary Burtka closes the clapboard slate signifying that the studio is a done deal on August 27, 2009 in Allen Park, Mich.

Jimmy Lifton was supposed to be Allen Park’s savior. He arrived in the Detroit bedroom community midway through 2009, shortly after General Motors (GM) and Chrysler declared bankruptcy. The metro area’s jobless rate was 15.9 percent, and officials were desperate to get residents back to work. Lifton, a Detroit native and president of Oracle Post, an audio and video post-production company in Burbank, Calif., had just the idea: He wanted to turn Allen Park into a movie-making hub.

The overture wasn’t as random as it may seem. Michigan had a nascent film industry thanks to a generous tax credit offered at the time; the state had lured Clint Eastwood to film Gran Torino and George Clooney to direct The Ides of March.

In August 2009, Allen Park’s city council unanimously voted to sell $31 million in bonds to buy and improve 104 acres so Lifton could develop a $146 million studio as a tenant of the city. At the event announcing the partnership, then-Mayor Gary Burtka declared Allen Park “Hollywood 48101” (a reference to the city’s Zip Code), and Lifton spoke of cranking out movies the way Henry Ford mass-produced cars. Lifton promised 3,000 jobs, which would have made the venture, known as Unity Studios, the biggest employer in town. “We will be here 25 and 50 and 100 years from now,” Lifton said.

That script didn’t pan out. Lifton has vacated the property and returned to California, leaving Allen Park with a bad case of buyer’s remorse. “We were buffaloed,” says Tony Lalli, a former councilman who voted for the bond sale. “Everyone said they wanted it, and we went along.”

Unity Studios was slated to be built on a lot that the city now leases for parkingPhotograph by Corine Vermeulen for Bloomberg BusinessweekUnity Studios was slated to be built on a lot that the city now leases for parking

Lifton opened a movie-making school at the site to prepare workers for Unity’s anticipated productions. Tuition ranged from $3,000 for script-supervisor training to $13,000 for classes on becoming a stunt coordinator, according to state records. Under a job retraining program, taxpayers helped fund a majority of the school’s students. The state of Michigan paid an estimated $871,000 in tuition for 127 of Lifton’s 201 students, according to Southeast Michigan Community Alliance, a group that helps the unemployed find work.

The school closed in 2010 after Lifton and Allen Park became embroiled in a dispute over their lease agreement. Lifton walked away without any liability, current and former city officials say. The city was charging Lifton $168,000 in annual rent on an office complex and had loaned him about $225,000 for renovations. Lifton left town without paying any of that back under a hold-harmless agreement with the city, says acting Administrator Dave Boomer. Lifton didn’t respond to repeated requests for comment. The agreement forbade Lifton from talking about the deal, according to Eric Cedo, who was Unity Studios’ marketing director.

Councilman Harry Sisko says the state paid for his $3,000 class at Lifton's schoolCorine Vermeulen for Bloomberg BusinessweekCouncilman Harry Sisko says the state paid for his $3,000 class at Lifton's school

Harry Sisko, an Allen Park councilman who took one of Lifton’s classes, says city officials assumed Lifton was lining up investors for the project. “We got hoodwinked,” he says.

Allen Park is hurting as a result. The bond sale—now under investigation by the U.S. Securities and Exchange Commission—doubled the city’s long-term debt, and the annual bond payments of $2.6 million are draining its $20 million general fund. The city officials who approved the deal have all stepped down or been voted out of office. Voters have twice rejected property-tax increases to pay off the bonds. To help shore up Allen Park’s finances, current leaders are planning to disband the police and fire departments. Michigan Governor Rick Snyder is now considering something more drastic: appointing an emergency manager to take over the city.

Allen Park did get at least one movie credit out of Unity Studios: War Flowers, starring Christina Ricci. It went straight to DVD.

The bottom line: The state of Michigan may take over a city that’s $31 million deeper in debt because of a failed deal with a Hollywood movie producer.

Christoff is a reporter for Bloomberg News.

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