The Latest In Acceptable "Welfare Mothers": Craft Beer Makers
Jeremy Bagott writes in the WSJ that craft beer makers are recent recipients of handouts from cities:
Two years ago, Richmond, Va., put up $33 million in public money and incentives to entice Stone Brewing to build a retail store, tasting room and East Coast distribution center. Shortly thereafter the state of Virginia extended $1 million in grants and $1 million in matching tax credits to help Hardywood Park Craft Brewery expand into an office park in Goochland County. The Richmond Times-Dispatch reported at the time that Virginia had specifically "targeted craft beverages as part of the state's economic development strategy."...Small towns are getting in on the action, too. At a meeting in November, the city council of Florence, S.C., population 38,000, approved an incentive package totaling $180,000 to encourage a craft brewery to set up shop beside town hall. The month before that, the city council of Reidsville, N.C., population 14,000, voted to sell a city-owned building for $1 to a startup brewing co-op. In tiny Perry, N.Y., population 4,000, a public development corporation matched bank financing this year to help a microbrewery build in its downtown.
This strategy might work for a while, but it suffers from the same drawback as other attempts at public "investment": Government isn't particularly good at picking assets or knowing when to get in and when to get out. Don't expect city officials to recognize it--or to turn off the tap of taxpayer money--when the craft beer bubble seems ready to pop.
...But here's the rub: Demand for beer overall has been sliding in the U.S. for years. Twenty years ago, nearly three-quarters of young people said it was their favorite alcoholic drink, according to surveys by Gallup and Goldman Sachs Investor Research. Less than half feel that way now. The market is shrinking, and craft beer has grown at the expense of national brands like Budweiser, Miller and Coors.
...If private investors alone were sidling up to the bar to throw down the cash, this might not be any public concern. But in many cases they're dragging taxpayers along for the bender--and, when it comes, the hangover.
Commenter at WSJ gets it:
Stephen Walters
Just another example of localities treating symptoms rather than causes.If your downtown is struggling, first check whether your tax and regulatory policies or gov't services are repulsive to investors and residents.
Subsidizing a downtown brewery (or stadium, or convention center, or any other "game-changer du jour") when your business climate is fundamentally unsound will surely fail to bring widespread urban revival. But the recipients of the special subsidies will surely express their gratitude with contributions to the pols handing out the favors -- which explains the continuing appeal of these boondoggles.
Subsidizing a downtown brewery (or stadium, or convention center, or any other "game-changer du jour") when your business climate is fundamentally unsound will surely fail to bring widespread urban revival. But the recipients of the special subsidies will surely express their gratitude with contributions to the pols handing out the favors -- which explains the continuing appeal of these boondoggles.
Sounds like this guy lives where I live.
But...so far as I know, the local craft brewers did what they did on their own, as did the "midtown" revival, and the on going renovation of one of our malls into something new. All done with private resources.
The city, on the other hand, handed over a building to a buddy of the council on a no-look bid after the previous bid winner (one of the aforementioned craft brewers) bailed on the building. He claimed they'll make money hand over fist, but experienced restaurantuers posit that claim is based on every shift being equivalent to a busy Friday night.
As well as declaring a portion of downtown to be "blighted" so they could roll taxpayer dollars to the owner of a high-end hotel in that area to cover the costs of some renovations.
Not to mention all the new student housing that took tax money from older student housing venues to subsidize their competition.
Thankfully, the vocal minority that pushed for a performing arts center seem to be resigned that no such thing is going to happen.
Yet, when the city is faced with declining revenue, they merely jack up our taxes, or jack up our (city-owned, and unregulated) utilities to cover. And if you complain, then they'll claim that they'll have to cut fire/police/ambulance services.
It shows, since we're the most violent city in Florida on a per capita basis. At least we were in 2014 and 2015. We'll see what 2016 left us.
I R A Darth Aggie at January 1, 2017 8:50 AM
Just like Detroit since 1968, more and more goodies and handouts to people who put stuff downtown, where no one wants to go, while the neighborhoods languish without maintenance on roads and infrastructure, adequate policing or fire protection or much of anything else. Meanwhile the jobs fled the high taxes that paid for the tax breaks and incentives for a tiny minority of businesses and the people labored under the insane regulatory and tax burdens that were created by an out of control government. Hell, you couldn't cable television in Detroit for years because nobody want to pony up the cash for regulatory requirements (and outright bribes to city officials).
Once again Detroit is on the verge of 'Revitalization', just like I started hearing in the early '70's and just like the past half-century it is all eyewash and unicorns.
Warhawke223 at January 1, 2017 11:31 AM
As a long-time beer drinker I have insight into these matters.
Good: ". . . craft beer has grown at the expense of national brands like Budweiser, Miller and Coors."
Bad: Expensive craft beer. Beer is not meant to be expensive and this beer bubble will burst the way the cigar store mania vanished in a cloud of smoke.
Bad: Government subsidies for toxic industries. See related voluminous literature on alcohol. Please don't use public money to help create these kinds of problems - even if there's a city tax on alcohol sales.
And Warhawke223, I R A Darth, and Stephen Walters are exactly right. But how do you fight City Hall?
Canvasback at January 1, 2017 11:52 AM
But how do you fight City Hall?
You can't, really. There are too many people who complain about things but continue to vote in the same politicians[*] because they haven't connected the two together. Or they're getting their own subsidy somewhere else and won't really go for a change.
[*] doesn't have to be the same people, but the same kind of people who have the same small coterie of insiders. In my case, city council is a part time job, so most of the heavy lifting is done by the city staff.
They're unelected, and have an outsized influence upon policy. So many things that come thru have been worked on by staff quietly, and by the time the electorate hears about it, it is declared to be a "done deal" and the council is simply a rubber stamp.
There will be a coming opportunity for a wealthy neighborhood to get screwed by a "done deal" that will affect their quality of life as well as their property values. We'll see if they can push back effectively.
I R A Darth Aggie at January 1, 2017 1:23 PM
Sixclaws at January 1, 2017 4:33 PM
Not really revenue Sixclaws. After all, often these high taxes and painful regulations actually result in lower revenue when everyone leaves. But it does give them power. I know from personal experience that when city regulators say they will be going through your business they mean +/- one week. But if you aren't there the moment they show up at your door then you are in for a world of hurt.
It's all about bullying the little guys.
Ben at January 2, 2017 4:39 AM
"It's all about bullying the little guys."
It's the Curley strategy.
Cousin Dave at January 3, 2017 6:59 AM
Thanks for posting this, sadly for me this is my hometown
tmitsss at January 4, 2017 9:21 AM
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