Raleigh Studios in Pontiac, Michigan is expected to default on $18 million in state issued bonds that were part of the financing for the $80 million studio complex that opened with great fanfare only 10 months ago.
That will force the Michigan state employee’s pension fund, which invested in the studio in 2009, to make a $630,000 payment immediately, and put them on the hook for potentially millions more in payments in the future, according to The Hollywood Reporter.
Raleigh had made two previous payments in February and August of last year, but has not made required monthly escrow set-aside payments since October, according to an article that appeared in the Detroit News last month.
Besides the $18 million in bonds, the 360,000-sq.-foot production and office facility was also built with $3.8 million in Federal Infrastructure Recovery money, $15 million in Federal Market tax credits, $11.1 in Michigan Film Infrastructure tax credits and equity investment by the investors.
The impact of the default on Pontiac studio is still unclear but it is not expected to affect other properties operated by Raleigh Studios – which bills itself as largest independent studio operator in the United States – located in Hollywood, Manhattan Beach, Playa Vista, Baton Rouge, Atlanta and Budapest.
Investors in Raleigh Michigan Studios are reported to be the Nelson family, John Rakolta, The Taubman Group and William Morris Endeavor.
The last big movie in Michigan, which kept the Raleigh studios filled much of 2011, was Disney’s new version of Oz, which wrapped at the end of December, leaving the studio mostly empty since then.
Disney, grandfathered under the old rules, got about $40 million in incentives from the state, and estimated that it spent about $105 million in Michigan.
