Richmond’s beer production will likely skyrocket in 2016, but it will take more than $30 million in city money over the next few years to get Stone Brewing Co.’s product flowing in the East End.
The mayor’s office said yesterday it will issue $23 million in bonds to fund the development of a 200,000-square-foot facility for the California-based brewery. And it will put up another $8 million in bonds for a restaurant and beer garden as part of Stone’s first East Coast operations.
The city also plans to throw in $2 million in grant money that it said will come from new taxes generated by the new facility.
“The project is expected to be transformative for the East End,” Tammy Hawley, a spokesperson for the mayor’s office, said in an email. “It will ultimately represent a $74 million investment in the city, with $41 million in machinery and equipment, $1.7 million in personal property, and a minimum of 288 jobs in the first three years.”
The highly coveted facility will be built on a 12-acre plot near Williamsburg Avenue and Nicholson Street near Rocketts Landing. Most of the land is currently owned by the Richmond Redevelopment and Housing Authority. Titan Virginia Ready Mix concrete company owns less than an acre of the property.
The Richmond Economic Development Authority will be Stone Brewing Co.’s landlord at its new brewery. The EDA will develop and lease the property to Stone, where brewing is scheduled to begin in January 2016.
The company will have an initial 25-year lease on the property, Hawley said. Stone will pay rent annually, and the amount will be enough to cover the city’s debt service, she said. The lease will also leave Stone in charge of paying real estate taxes, insurance and maintenance costs for the brewery.
The city isn’t alone in opening up its wallet to lure Stone to Richmond. The state is pitching in $5 million from its Governor’s Opportunity Fund for the project and another $250,000 from the Governor’s Agriculture and Forestry Industries Development Fund.
“We put all in to get this project,” Gov. Terry McAuliffe said at an announcement event at the executive mansion on Thursday.
Stone said it will invest $74 million in the brewery. That number includes land, capital equipment, personal property and real estate improvements, company spokesperson Sabrina LoPiccolo said in an email, but will not include rent Stone will pay over the term of its lease.
The Stone project, nicknamed “Project Gogi” at city hall, was a highly competitive economic development opportunity sought by multiple cities up and down the East Coast. Richmond won out over Norfolk and Columbus, Ohio at the end of a site search that spanned 20 states and took the better part of this year.
Stone expects revenue at the site to exceed $100 million in its fourth year and eventually reach hundreds of millions of dollars annually. The company has said the brewery will create more than 288 new jobs.
Stone will become the largest craft brewery in Virginia the day it opens its doors. It plans to brew more than 120,000 barrels of beer in its first year, a number Virginia Secretary of Agriculture and Forestry Todd Haymore said will nearly double the production of the state’s 82 breweries currently in operation.
About 10 of those breweries are in the Richmond area. And while some local brewers are happy to have Stone in town, the amount of money the state and city will put up for the project has raised some eyebrows in the brewing community.
Dave Gott of Legend Brewing Co., a Richmond brewery that started in 1994, was excited about the boost Stone will give the local beer scene.
“Bringing a big-name brewery into the area really solidifies Richmond and the surrounding area as a destination now,” Gott said. “If I worked for the department of tourism, I would be dancing in the streets.”
But Gott said he’d like to see a little more help for the smaller breweries from the groups that are rolling out the red carpet and opening up the checkbook for Stone.
“To bring a major, major competitor into the market – I don’t see anything wrong with it, it’s a lot of jobs – but I think it would be nice for them to reach out to the brewing community in Richmond to see where they can help out,” Gott said. “I can guarantee every brewery here has a million and one things they need to do, and the city can be very instrumental in getting those through.”
Richmond isn’t the first beer town to bring a major player into its hopping microbrewery scene. Asheville, N.C., has brought in big-time western breweries Sierra Nevada Brewing Co., New Belgium Brewing Co. and Oskar Blues in recent years.
And California-based Green Flash Brewing Co. is breaking ground this month on its own East Coast facility in Virginia Beach.
But Norfolk-based Smartmouth Brewing Co. isn’t worried that Green Flash will cut into its business, and spokesperson Chris Neikirk said having the major breweries nearby could lend clout to lobbying efforts for brewery interests at the state level.
Green Flash recently brewed a collaboration beer with Smarthmouth while in Norfolk, and Neikirk said the 2-year-old company picked up some tips during the visit.
“They’ll bring a wealth of information– they’re seven or 10 years ahead of us,” she said. “It’s kind of like having that big brother telling you how to pick up girls.”
Neikirk said she will keep the state incentives for Stone in mind the next time Smartmouth expands its operations. And while she didn’t know what sort of incentive package Norfolk may have put together in its attempt to lure Stone, she said the local breweries would have wanted a piece of the action as well.
“I think had they chosen Norfolk, we would have wanted to see what the city offered them,” she said. “If they gave them discounted water or discounted electric, we would have wanted (the same) for us.”
Stone wants to begin site work on its Richmond brewery next month in hopes of beginning construction in January, company co-founder Steve Wagner said Thursday. That timeline would mean the company would start brewing beer in January 2016.
Wagner said he hopes to open a retail operation at the same time as the brewery and said the plan is to add the restaurant and garden phases by Stone’s third year in Richmond, if not sooner.
In the meantime, City Council will consider a pair of ordinances to issue special use permits that would accommodate the brewery at a Monday meeting. One will allow Stone’s brewery at the site announced Thursday, and the other will pave the way for a similar brewery at the Reynold’s South Plant owned by development company Thalhimer Realty Partners.
Thalhimer Realty Partners Vice President Matt Raggi said the company is no longer pursuing the Stone brewery and will carry on with its original plan to build apartments at the site.
Correction/clarification: Stone previously said that its $74 million investment in the Richmond facility included rent it will pay to the city to lease the planned property. It has since said that figure does not include rent.