City makes pricey promises to land Stone Brewing

Mayor Dwight Jones speaks at Thursday's Stone Brewing announcement. Photos by Evelyn Rupert.

Mayor Dwight Jones speaks at Thursday’s Stone Brewing announcement. Photos by Evelyn Rupert.

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.

Stone's site plan

Stone’s brewery and store will open first, followed by a beer garden and restaurant.

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.

Wagner speaks at Thursday's event.

Stone Brewing co-founder Steve Wagner speaks at Thursday’s event.

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. 

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17 Comments on "City makes pricey promises to land Stone Brewing"

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George J. Myers
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The amounts are wrong above. The city is not providing $31 million to the brewery in terms of borrowing. Instead, the EDA will be inducing bonds to support the development, enabling the company to gain its capital at a cheaper rate, and charging the company sufficient rent to cover the interest and principal repayments. I thought you were a business paper and had some understanding, but you are implying the city will be using general obligation bonds instead of revenue bonds. It is sad that your headline and the lead implies the city is doing something different for Stone than… Read more »
Brian Ezzelle
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Plus the story originally stated this would be the biggest brewery in Virginia which obviously is not true (AB in Williamsburg). Note the misspelling of “facility” in the correction acknowledgement.

Kelly Ludwig
Guest

Ben Franklin said “Beer is proof God loves us and wants us to be happy”. Stone Brewery’s logo is a devil. Obviously, Richmond is being set up to be ground zero for the rapture, which the city will promote as “A bigger party than our annual Folk Festival”.

Frank Smith
Guest

Ehhhhx-cellent! I will be there as the horsemen trample my bones into dust. OR – we’ll all have a beer and relax.

Roy Drake
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Let me guess, you aren’t a fan of Dirt Devil and devil’s food cake either.

Kelly Ludwig
Guest

Real Americans like angle food cake.

Roy Drake
Guest

“Real Americans” like having options and choices. Not everyone wants plain and boring.

C. Jay Robbins
Guest

Crony capitalism. Look up Richmond’s SOL scores. Why should this business have special access to subsidized interest rates?

Nia Strei
Guest

C.Jay
Let’s compare the SOL scores of kiddos with parents employed at steady jobs with solid expanding employers to those of kiddos whose parents are unemployed?
It’s all interrelated, and these are good jobs that Stone is bringing to RVA. It is money well spent.
Their facility in SoCal is a shining example of how to do things right in the craft brew industry.

C. Jay Robbins
Guest

Nia:
You do not answer the question. Why should this business get preferential loans from the taxpayer? Spend public money on public infrastructure. You want higher SOLs? Spend more on teacher training. The most expensive welfare queens are corporations.

Brian Glass
Guest

This is what economic development is all about. No smoke and mirrors, like the stadium in Shockoe bottom being an economic generator.

There will be construction jobs as well as permanent jobs, within the city limits, that are accessible with public transportation.

Roy Drake
Guest

I agree Brian. Richmond is a great small city with tons of potential. We’ve made all sorts of national lists for what we have to offer. Landing Stone Brewing is definitely good for the immediate and surrounding neighborhoods and RVA as a whole. The benefits far outweigh the risks.

Mark Applet
Guest
Just playing devils advocate (because King Jones now forces me to); On the surface, doesn’t this sound a little like the Sports Quest situation? What if, on the outside (ha ha) chance Stone isn’t successful here and they are gone in 4 years? Who and what then makes up for that stream of rent payments? There is no guarantee that this micro-beer bubble will last in VA. Seems like a large risk for some reward. But then again, it’s another feather in the hat of Jones, he certainly has proven he doesn’t care about the longevity of our City. Eh,… Read more »
Ethan Lindbloom
Guest

Mark –

To answer your question, if this whole operation folded after 4 years, then the investors who bought the revenue bonds would lose their money. The city is not on the hook for revenue bonds; the interest rates and credit ratings of the bonds would be based on the risk of the specific project generating the revenue. If you’re not comfortable with the viability of this project, then don’t buy the bonds.

EDL

Mark Applet
Guest

Thanks for the clarification Ethan. Once again though, I wish these City deals would spell out how they work. To the average person, yours truly, they all seem shady. Wouldn’t more transparency make it more palatable?

Mark Applet
Guest

Ethan,

If I am not mistaken, the bonds that have been proposed are General Obligation Bonds and not CDA bonds. Given that understanding, wouldn’t it mean that if they disappeared, then the tax payers are held responsible for the bond payments going forward?

Ethan Londbloom
Guest

http://www.timesdispatch.com/news/local/stone-project-carries-potential-financial-risk-for-richmond/article_c8c0a9c7-8abb-51b7-9ee7-94e1715a36f3.html

I stand corrected. You’re right.

GO bonds have higher credit rating and lower interest, but we are on the hook!

I still support this project (VERY MUCH!), but it’s important that we realize as taxpayers that we are heavily invested in the success of this enterprise.

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