WE’LL DRINK TO THAT: With a $5 million check to Stone Brewing Co., Gov. Terry McAuliffe, right, helped bring high times to the Capitol last week.
By Kenric Ward | Watchdog.org Virginia Bureau
RICHMOND, Va. — Thirsty for jobs and good times, the city of Richmond is vowing to build a brewery on the James River.
The estimated $36 million tab includes $5 million from Gov. Terry McAuliffe’s “Opportunity Fund.”
If approved by the City Council, most of the money will be raised with a general revenue bond, which puts the city’s taxpayers on the hook if the Stone Brewing Co. venture goes bust.
Details remain sketchy, and that has skeptics wondering if the city will see a replay of the stalled downtown baseball stadium project touted by Mayor Dwight Jones.
“There is no free lunch,” said Paul Goldman, a Richmond lawyer and longtime civic activist. “The public is in a ‘show-me’ mode.”
So far, there hasn’t been much to see. In announcing the project, local leaders and California-based Stone executives provided only a sketchy outline: a city-built brewery that Stone would lease back over time and hire 288 workers.
The cost works out to $125,000 per employee.
Richmond beat out Norfolk, Va., and Columbus, Ohio, to become the San Diego craft brewer’s Eastern outlet.
Columbus offered Stone tax abatements and incentives totaling $3.3 million over about 10 years. Norfolk officials would not disclose what they offered.
FEELING FIZZY: Founded by Greg Koch and Steve Wagner, San Diego-based Stone Brewing Co. is America’s 10th largest craft brewer. The 18-year-old firm consistently ranks among the fastest-growing private companies in the country.
“Having the 10th largest craft brewer in the United States choose the Commonwealth for an operation of this size and stature is a true testament to Virginia’s ability to compete at the highest level when it comes to attracting world-class businesses to our state,” said Maurice Jones, Virginia secretary of Commerce and Trade.
Goldman said he understands that cities and states have to compete financially for new businesses. Yet he criticizes local officials for a lack of transparency in their dealings.
With the city using its public-private Economic Development Authority to helm the project, Goldman said he fears corners could be cut.
“Will there be open bidding, as required by state law for any projects over $50,000? Will taxpayers be protected? We don’t know the answers to these questions,” Goldman said.
Tea partyer Ron Wilcox has more questions.
“All this Virginia tax money and they could not find a Virginia-based firm? So they are sending our tax dollars to California?” asks the lead organizer of the Northern Virginia Tea Party.
“It sounds like a case study of crony capitalism, with the taxpayer ponying up even the tax revenues that would be generated to the company,” Wilcox said.
“What about breweries and restaurants that are currently in Richmond that would have to compete against a tax-advantaged competitor? This is not a fair deal for them.”
The City Council would have to approve the project, targeted for municipally owned property near Rocketts Landing. Stone, in turn would agree to pay back the city’s investment.
The terms would be sweet for Stone, Goldman said , because the company would benefit from the lower-than-market interest rates of municipal bonds.
At last week’s announcement, McAuliffe proclaimed, “This competitive, high-profile project really puts Virginia on the map and cements our standing as a serious player in the craft beer industry.”
Tim Wise, president of the Arlington County Taxpayers Association, said McAuliffe’s use of the Governor’s Opportunity Fund demands scrutiny.
“There seems to be enough wiggle room in state law to allow the $5 million grant for this crony capitalist project. What’s needed is some much-needed oversight of the Governor’s Opportunity Fund by the General Assembly to determine how effective the fund really is,” Wise said.
Kenric Ward is a national reporter for Watchdog.org and chief of the Virginia Bureau. Contact him at (571) 319-9824. @Kenricward