When the Chicago Latino Film Festival opens this week, it won’t include a blood-and-gore offering by Chicago filmmaker Ricardo Islas. Islas has been a fest regular since 1996, contributing flicks from his Alpha Studios with titles like To Kill a Killer, Night Fangs, and Lockout. He says they drew “decent” attendance and inspired lively discussions, so he was surprised when this year’s submission, El Dia de los Muertos—in which an impoverished Mexican immigrant falls victim to a band of American punks who get their kicks by making snuff videos—was rejected. More than any of his other movies, Islas says, this one is a great fit with the festival: the plot turns on Latino themes, it’s bilingual, and it was shot in both Mexico and Chicago, using local talent.

Islas claims he’s being “censored” and has protested in a widely circulated open letter. But festival director Pepe Vargas has a different explanation: El Dia de los Muertos, he says, simply failed to meet the festival standard. In the opinion of the judges, it isn’t good enough to put in front of a paying festival audience.

Whether you agree that Islas’s movie has redeeming qualities or think it’s a piece of sadistic crap, his campaign has opened a window on problems at the 24-year-old festival. Some veterans—filmmakers and former employees—say Vargas is distracted by his real priority: running a Latino cultural center and trying to build a $50 million home for it. Meanwhile, they say, the festival he’s promoted as the nation’s “oldest, biggest, and best” is stagnating under an outmoded vision. They’d like to see it become a more industry-oriented event.

Born in Colombia and trained as a lawyer in Argentina, Vargas came to Chicago in 1980. He started the film festival in 1985 with a $10,000 budget, 14 films, and an audience of 500, and watched it mushroom over the first decade or so. By 1995 he was expanding into other cultural programming, and in ’99 the organization was renamed the International Latino Cultural Center of Chicago to allow for a broader range of activities. The film festival is now one of nearly a dozen programs—others include everything from stand-up comedy to art exhibits—produced by the ILCCC, which has a partnership with Columbia College and is housed there. Vargas says his goal all along has been to present a “true picture” of the “extremely diverse” Latino community. He believes the festival has “changed the perception about Latinos” by “sharing our culture through film.”

The film festival audience is now about 30,000, the annual budget $1.2 million (60 percent of which is goods and services donated in kind). Ticket sales account for roughly 20 percent of the budget, 65 percent comes from corporate sponsors, and the rest from public and private donors. The center has a full-time staff of four, and it’s working to erase the last of a $150,000 debt Vargas says was run up while he was on a recent sabbatical. He admits that the festival’s growth has slowed to somewhere between 2 and 5 percent annually, but blames that on the media’s preference for Hollywood over foreign films and the ILCCC’s lack of money for advertising.

Producer Carolina Posse—who worked at the festival from 1998 to 2004 and came back to program it last year while Vargas was away—sees it differently, arguing that “the Chicago Latino Film Festival has had the opportunity to grow, but unfortunately the board and Pepe Vargas have made the choice of playing it safe” by making conservative film choices, failing to acknowledge the business side of filmmaking, and not keeping up with technology. Even the parties are predictable: “They just do the same thing every year.” As a result, “they’ve lost audience, sponsors, and filmmakers,” she says. “I think they’re stuck in a very 80s mentality. The film festival is not looking at how the industry has changed.” And time is running out, she adds: “If they don’t make changes, the new, younger audience is not going to come in.”

New, younger, United States-bred Latino artists may not show up either. Chicago filmmakers Dalia Tapia and Esau Melendez, both of whom have shown at the festival before but didn’t submit anything this year, say the festival emphasizes foreign films over local work (which is often relegated to smaller venues and difficult time slots). That may have been appropriate once, Tapia says, “but now Latinos live and die here and our films are important too.”

Melendez and Tapia say similar events in other cities cater more to filmmakers’ needs. For example, the Latino film festival in New York, which is growing at the rate of 30 percent annually, sponsors panel discussions, attracts distributors,and awards prizes in various categories, while the focus here, Melendez says, “is on [running] a community center, not on developing the industry.”

Vargas says he’s resisted competitions other than an audience-choice award because they’re expensive and often “charades.” He claims 95 percent of the directors who come to his festival want a noncompetitive environment and says the only awards that count are given at places like Cannes anyway. He says, “Chicago’s not a place where deals happen.”

As for El Dia de los Muertos, Vargas says that like every other submission it was viewed by four members of the selection committee, each of whom independently scored it on a scale from one to five. Any film with an average score above three gets consideration, he says. In this case, the decision was clear: “I got four feedbacks, with a very, very low average.”

Islas says his film was bad-mouthed by a festival staff member as “very bloody” and wonders if the festival standard for horror films and thrillers has been surreptitiously tightened up. “We as independent filmmakers have enough dragons to fight against in a market system where, unless you keep up with certain mainstream rules, you will never be able to show your work,” his open letter says. “Within this unfair regime, venues like the Chicago Latino Film Festival have the social responsibility to be the alternative—the open minded alternative—to mainstream distribution.”

Vargas notes that Islas’s film isn’t the only one that was rejected—of nearly 400 submissions, only 120 made the cut. He says the decision boils down to one question: “Will I be providing a service to the audience who is going to pay $10 for this?”

Ink and Paper, $15

Although just about every print publication in the country is in crisis mode, the Chicago Artists Coalition is forging ahead with its new venture, Prompt, a twice-yearly journal that executive director Olga Stefan says will focus on “the intersection between art and all other domains of our society.” The first issue, scheduled for October with a run of 5,000, will be full color, six by nine inches, perfect bound, and about 76 pages. It’ll sell for $15 a copy (with $20 annual subscriptions for coalition members). CAC publications manager Jeremy Biles will edit.

Stefan pegs the cost at about $25,000 per issue and says CAC has money set aside to subsidize the launch but is also soliciting ads and donations. According to its hype, Prompt aims to jump into the gap left by the demise of the monthly New Art Examiner and bimonthly Dialogue. Each issue will be built around a theme; the first is “Practical Revolution.” Hang on for articles like “New Models of Green Architecture,” and “The Role of the Artist—Agent of Change or Not?”v

For more on movies, see our blog On Film at chicagoreader.com.