The Hollywood Reporter is stating an agreement has been made between New Zealand and Warner Bros. that will allow The Hobbit to film. An announcement was made by Prime Minister John Key that New Zealand will change the criteria of it's large budget incentive program, which will allow for an additional rebate to Warner Bros. That rebate could be up to US$15 million, depending on the performance of the two-part film.
Also announced is a "long-term strategic partnership" between New Zealand and Warner Bros. It's a perfect example of I will scratch your back if you scratch mine. Warner Bros will work to promote New Zealand as a film production and tourism destination. In turn, New Zealand's government will offset up to US$10 million of Warners' marketing costs.
The deal gets better and will go on for an unspecified time to include promotion of various Time Warner properties to include DVDs. The spotlight will also be on New Zealand as they will play host to one of the world premieres of the The Hobbit.
The landscape of New Zealand is ideal for The Hobbit so I am glad that all parties have worked their issues out. Lets hope that nothing more gets in the way!