The producers of the nuclear holocaust film Terminator Salvation, released earlier this year, originally planned to crash a helicopter into a lake in Budapest. But they decided instead to take advantage of New Mexico's film incentives program and make the science-fiction movie right here in the state, much of it at the 28-acre, two-year-old campus of Albuquerque Studios.

A shallow tank on a few acres of flat desert outside the facility became the crash site, monster machines soared over the Rio Grande Gorge, and John Connor (Christian Bale), a future Resistance soldier, rode a motorcycle across the vast mesa west of the Duke City.

Tax rebates, interest-free loans and free use of some state property are luring filmmakers to New Mexico, creating jobs and new sources of revenue. The fourth feature film in the Terminator series was the biggest picture shot in the state last year and one of 44 major TV and film productions made in New Mexico since January 2008.

Albuquerque Studios also are home to the Emmy Award-winning television series Breaking Bad, now in its third season.

But six of its top-of-the-line sound stages built in 2007 and two smaller studios added later are not all fully booked, according to chief operating officer Nick Smerigan. And now he might be getting some competition from a new film studio complex that is expected to break ground this winter on county-owned land off N.M. 14 south of Santa Fe.

That raises the question about whether there is enough demand for another major studio facility in New Mexico.

County officials are gambling there is. State and local officials think so. Lisa Strout, director of the state Film Office, said there's no doubt that Albuquerque Studios has changed the landscape of the film business in New Mexico.

"Their presence has allowed some big films to come in, and we are extremely grateful to have that infrastructure in the state," she said. "At the same time, we also want to make sure though that when we see trends — we see quite a few films coming to Santa Fe — that we build capacity."

Smerigan says investors should be realistic about "what the business was, what the business is and what the business is going to be."

Nearly every state has a film incentive package now, so every studio venture has to make a best guess as to the right time to add more infrastructure, he pointed out.

"This is certainly a global market," Smerigan said. "There are movies that we compete for with South Africa and Budapest and London and Mexico ... My competition is everybody in the world that has open space."

Project gets wings

In a PowerPoint presentation, Santa Fe Studios told county commissioners they believe they will be able to reclaim Santa Fe's "dominant position in the state's film industry before Hollywood completely migrates to Albuquerque." But Lance Hool, chief executive officer of Santa Fe Studios, and his son, Jason Hool, the company president, realized they needed advice from someone who knows about getting things done in Santa Fe. Hool said officials at both the county and at the State Land Office referred them to Javier Gonzales, a former county commissioner who is now head of the state Democratic Party and has a background in public/private venture capital.

"We quickly came to determine that doing business in Santa Fe is not too standard," Jason Hool said. "Coming into Santa Fe political, business-wise, et cetera, for outsiders is not so simple."

In a recent interview about his role in the project, Gonzales said he "updated" figures such as Gov. Bill Richardson, who funneled $10 million in state grants to the project, and members of the County Commission, which approved a $6 million loan to the enterprise last month.

But, he added, "This project from the very beginning has stood on its own. It has not needed political influence to advance it. It has not needed people who are connected."

As the project moves ahead, Gonzales hopes to have an active role in its administration and will share in its "profits and liabilities," he said.

"I will continue to play a role into the future. I am excited to be a part of Santa Fe Studios. Now it's about delivering the studio and making sure we are attracting large films ... whatever it takes to keep the lights on," Gonzales said.

Getting to New Mexico

Five generations of Hools have made their living in the film industry. Lance Hool was born in Mexico City, then migrated to Hollywood when his son, now 35, was "a kid." He produced the HBO movie The Tracker (also known as Dead or Alive) here in 1987. The family became more interested in New Mexico after the state's film incentive program started getting publicity in 2003, Jason Hool said.

They also have ties to the governor. Members of the family contributed to Bill Richardson's 2008 presidential campaign, according to Federal Election Commission records, and The Albuquerque Journal has reported the Hools held a Hollywood fundraiser for him. Lance and brother Conrad also played in the same Mexico City children's baseball league as the governor.

Downplaying the suggestion that any of those factors greased the skids for taxpayer cash, Jason Hool said putting a film studio in Santa Fe — with its "special place" within creative circles — seemed like a no-brainer.

"From a technical perspective it will be very similar to either Albuquerque Studios or to Warner Brothers in Burbank (California)," he said. "There are industry standards for these spaces and we will be at industry standards. ... What will be different is Santa Fe. Santa Fe is a global brand and a global destination for international creative type people."

The Santa Fe Studios partners have agreed to buy 65 acres of land from the county for $2.5 million and build a production facility on about 8 acres. A separate corporation called La Luz — in which the Hools are also partners — will develop the rest of the land for other film industry related businesses. The county has agreed to pay for about $3.5 million worth of infrastructure improvements on the land they bought from the State Land Office last year.

The land is an area the county has earmarked for economic development since 1998 when it platted a business park there. Film production might begin as early as next summer, Jason Hool said.

Criticism and hope

Albuquerque Studios' Smerigan said the goal of completing construction without public assistance was key to getting its operation off the ground quickly and efficiently.

Even though the project is at Mesa del Sol — where the state and local officials made early site improvements to lure tenants — Smerigan said choosing that location has little to do with the second-hand subsidy.

Proximity to the Albuquerque International Sunport and wide open spaces on the mesa more of a factor, he said.

"The site was clean. It was flat. It served our purpose," he said. "As I looked at the luxury of being able to do the project 100 percent unrestricted because there were not other buildings, no neighbors ... that was the reason we came here. It fit all of the objectives we were trying to reach."

Although the Santa Fe project will start off with two sound stages, Jason Hool said the end-game plan is to be just as big as the one in Albuquerque, which boasts six 24,000-square-foot stages and two smaller ones.

Santa Fe Studios will be built using green technology and green-building principles, he said. The company also is hoping to benefit from recent upgrades at the city's Municipal Airport which recently added daily nonstop service to Los Angeles.

In return from money from the state and county, the Hools are promising high-paying jobs for New Mexicans. Just how many the studios will support is one of the unknowns, although an economic development study conducted by a Santa Fe County contractor anticipates tax revenue will average around $3.7 million per year.

Santa Fe Studios has agreed to provide 500,000 hours of above-minimum-wage jobs — including construction jobs — within six years of the closing date of the first phase of the project.

Much of the employment in the film business is cyclical, however. Albuquerque Studios has 17 permanent employees, although big-budget films like Terminator employ hundreds of workers when they are shooting. On-site vendors such as Star Waggons, which provides custom location trailers to the entertainment industry, equipment renters, a caterer and a grip and lighting company have about a dozen employees. Other partners with full-time workers include: Clairmont Camera, which rents and repairs cameras; and ReelzChannel, which produces cable television content about the entertainment industry and broadcasts from the studios.

Through itinerant production work, however, Smerigan said 3,000 individuals have earned annual full-time salary equivalents since the studios opened.

Both studios have partnerships with local schools including Santa Fe Community College and the Technical Vocational Institute in Albuquerque, which they say are critical to keeping skilled workers available in New Mexico when production is happening.

While Variety magazine recently named New Mexico the No. 3 place to make movies among the 50 states, debate continues about the merit of film incentive programs. A study prepared earlier this year for the Film Office and the State Investment Council found that in 2007, 30 films made in New Mexico generated $253 million of spending. But a report by New Mexico State University shows the state earning only about 14 cents for every dollar spent on the film industry. The issue is likely to come up again when the state Legislature meets next year to discuss budget issues.

Both Gonzales and Jason Hool say public officials should be commended, however, for their roles in bringing the studios to the region. "Santa Fe County's participation might have been the first time they provided a loan to a private entity, but it's not the first time government within our own community and within the state has stepped up to provide public dollars for the public benefit," Gonzales said.

Santa Fe County Manager Roman Abeyta acknowledged that the county's participation is something of a gamble.

"There is risk any time you take on an economic development project," he said. "The thing that we have heard is that actors and directors want to come to Santa Fe because it is Santa Fe. It may not be good news for the Albuquerque Studios is what people keep assuring us."

Contact Julie Ann Grimm at 986-3017 or jgrimm@sfnewmexican.com.