Amid Shrinking Film Incentives, Alamo City Studios Goes the Co-Op Route

Leaps of faith are nothing new to Kerry Valderrama.

The CEO of Alamo City Studios has jumped out of a perfectly good airplane 36 times because he wanted to fight for something he loved. Each time he made the leap, he did so as a member of the U.S. Army’s 82nd Airborne Division, including while serving in Afghanistan.

Now 39, with his military service in the rearview, Valderrama is using some of the best traits instilled in him by the Army to fight a very different fight, this one to keep a dream alive.

Valderrama founded Alamo City Studios on San Antonio’s near East Side hoping to one day make feature films again in San Antonio. A major obstacle to his goal is funding cuts made in recent years to incentive programs that used to help bring production of movies and television shows to the state.

While Valderrama waits for state leaders to change their minds about those incentives, he has turned his 100,000-square foot building just east of downtown into a co-op of sorts for creative types. What Geekdom is for San Antonio’s tech community, Alamo City Studios is for filmmakers, video game designers, and others.

Valderrama said he took out nearly $250,000 in commercial loans along with his own investment to renovate the building at 1113 E. Houston St. four years ago. He envisions ultimately turning the facility into a state-of-the-art sound stage, but has had to take small steps to build toward his goal.

“Even though we’ve lost being able to shoot major motion pictures or television shows, we’re still churning out two to three independent projects every year whether they be documentaries, feature films or short films,“ Valderrama said. “So the indie spirit is certainly alive and well here.”

Thirty businesses rent space in the facility, paying between $300 and $500 per month based on square footage. Another 60 collaborators without fixed offices use common areas at Alamo City Studios to work 9 a.m. to 1 a.m., seven days a week.

The space is home to screenwriters, editors, designers, special-effects artists, game developers, a casting agency, a marketing company, a photographer, fashion designers, and the San Antonio Film Society.

The largest warehouse area where Valderrama hopes to eventually build his sound stage now serves as storage for haunted house sets, panic rooms, and an area to build any set pieces that might be needed for individual projects.

John Frazee, founder and CEO of Love.Marketing, works with his five employees on a variety of projects with roots in website development, research, marketing, advertising, and gaming.

“We now have 26 clients that we rank on the first page of Google and we do that for fun and that kind of pays the bills,” Frazee said. “Just whatever is next that no one has done yet is what we’re working on.”

The state allocated $95 million to film incentives in 2014 and 2015, but then began slashing funding drastically, cutting it to $32 million prior to this legislative session. In March, the Texas House approved a funding plan for state government for the next two years that included an amendment to divert another $18 million from the film marketing program to women’s health services.

Those cuts hurt Texas filmmakers and make it difficult for the state to compete with states such as California, Georgia, New Mexico, and New York, which offer robust incentive programs to the movie and television industries.

“For some reason, the powers that be at the state level, they just don’t feel it’s a compelling argument using taxpayer dollars to incentivize feature films,” said Valderrama, who is a member of the board of the Texas Motion Picture Alliance, a statewide advocacy group.

Valderrama is creator, producer, co-writer, and co-director of Sanitarium, a 2013 horror anthology starring Malcolm McDowell, Lou Diamond Phillips, and Robert Englund. The movie is one of dozens of motion pictures made here over the years and is Valderrama’s most significant work to date.

Right now, he has no idea when or if he will be able to make another feature film in San Antonio. He said he was buoyed three years ago when the City of San Antonio increased its film incentive rebate program from 2.5 percent to 7.5 percent on qualifying productions with at least $100,000 in San Antonio spending. So he continues to focus on speaking out for the film industry while building the co-working space and production hub he has created.

“I’ve seen so many video production companies build facilities [in San Antonio] only to have to move out of them within six months to a year, which is why a co-working space is the only way a place like the studio can survive,” Valderrama said. “So that’s why every single office is its own production company and diversifying that to where we have so many diverse companies that we’re OK. So if one company goes a couple weeks or a month without a gig, it’s alright because they’re not spending thousands of dollars to keep the lights on. They can have that wiggle room.”

Valderrama said numerous out-of-town television stations and film crews used Alamo City Studios as their home base during the 2018 NCAA men’s basketball Final Four. A Nike ad featuring then-San Antonio Spur Kawhi Leonard also was filmed there.

The U.S. Air Force recently shot an in-house program modeled after the television show Shark Tank in the building. It involved the use of five cameras and required as many as 20 crew members.

It is projects like those that Valderrama says keep him working toward better days ahead for his industry.

“We’re hoping that with our own local film incentive program and the return of more incentives once again from the state, that will shift and attract more feature films once again here to San Antonio,” he said, “and more specifically to Alamo City Studios.”