After yet another spirited debate about the merits of the state's film-incentive program — focusing on the zero-percent interest loans for qualifying production companies — the State Investment Council voted Tuesday to renew film loan-program adviser Peter Dekom's contract at a reduced salary of $260,000 per year.

Dekom, a Beverly Hills-based entertainment lawyer, has served as New Mexico's film adviser since 2001, earning about $360,000 a year for reviewing and recommending projects for the no-interest loan.

The state offers the loan (with back-end participation in lieu of interest) for up to $15 million for qualifying feature films with budgets of at least $2 million. Production companies must prove they have a guarantor in place and a distribution deal set up, and must shoot at least 85 percent of the film in the state. The production also has to employ at least 60 percent of below-the-line (technical crew) New Mexicans.

According to the governor's Deputy Chief of Staff Eric Witt, only about 20 percent of all films shot in the state have used the loan.

Earlier this year two outgoing members of the SIC — Andrew Davis and Peter Frank — urged the council to pursue a cost-analysis report on the zero-percent loans and questioned the worth of Dekom's involvement.

SIC members Patrick Lyons (State Land Commissioner), Leonard Lee Rawson, and Michael R. Martin — all of whom voted against Dekom's contract — reiterated these issues during Tuesday's SIC meeting at the Roundhouse.

"Why do we need someone to help us lose money?" Rawson asked after noting that over the course of eight years the state has loaned over $250 million (closer to $258 million, according to Witt) and only taken in a $500,000 return on one film (Employee of the Month) as a result.

"If we're in it for jobs," Rawson added, "I would say that's not the SIC's job."

Lyons concurred, telling the assemblage that during these tough economic times it's difficult to pay for such a consultant position when yet more state budget cuts — including in public education — are on the way.

But Dekom and the film program had more supporters than detractors among SIC members Tuesday. SIC member Douglas M. Brown said Dekom provides invaluable service as an insider who can predict industry trends and ensure applicants meet the requisite qualifications to participate.

Chairwoman Katherine Miller also defended the program and Dekom, saying it is a vital part of the state's efforts to develop jobs and encourage new industry.

Several members questioned whether Dekom may have a conflict of interest given he has admitted to close relationships with Hollywood-based directors and producers, and one of his clients once applied for the loan. Likewise, he is "of counsel" in the law firm Weissman, Wolff, Bergman, Coleman, Grodin, and Evall, which handles the actual loan-preparation documents once the loan is approved.

Brown, as well as other supporters of Dekom, said the SIC would keep a close eye on that issue and that Dekom has promised to reveal any potential conflict-of-interest situations.

In the end, the council, which manages the state's permanent trust funds, voted 7 to 3 to renew the 3-year contact, which has a 60-day termination clause, effective Aug. 1.

Witt said that while it's true the zero-percent loan deal has not made much money for the state, it also hasn't lost money.

"How do you measure the return in this case?" he said. "Creating jobs? Diversifying the economy? Building infrastructure? This all makes sense for the state."

Contact Robert Nott at 986-3021 or rnott@sfnewmexican.com.