Woo hoo! Giving Money to Rich, Out-of-State Capitalists Is Fun!

Richmond Mayor Dwight Jones (left) and Governor Terry McAuliffe.
Capitalist benefactors: Richmond Mayor Dwight Jones (left) and Governor Terry McAuliffe.

Richmond is home to numerous craft brewers: Legend Brewing, Triple Crossing, Richbrau, Strangeways and Hardywood Park, just to name five that show up on the first page of a Google search. But when it comes to rolling out the red carpet, state and local government is lavishing its favors upon Stone Brewing, of Escondido, Calif. — $23 million in City of Richmond bonds to build the brewery, $8 million to build a restaurant, $5 million from the Governor’s Opportunity Fund and potentially $250,000 from the Governor’s Agriculture and Forestry Industries Development Fund.

Admittedly, none of the local brewers have achieved the scale of Stone Brewing, which announced last week that it would invest $74 million in Richmond, creating 300 jobs. In a state economy struggling for traction, Stone’s announcement is the fifth largest economic development deal (ranked by investment) so far this year.

But the massive loans and subsidies raise a number of issues of equity and fairness, as Bart Hinkle noted one such issue in his Times-Dispatch op-ed this morning:

Stone executive Steve Wagner says other factors determined its final decision: water supply, wastewater capacity and proximity to suppliers. If that’s true, then Richmond should have been able to land the brewery without the handouts. It’s bad enough to think officials felt they had no choice but to offer Stone public inducements. It’s even worse to think the inducements were necessary.

Hinkle also wonders, as I do, how the home-grown brewers feel about the special treatment accorded their potential competitor. While the Stone Brewing brewery will serve a wider East Coast market, its restaurant will compete more directly with local brew-pubs. And, really, how many brew pubs can a city Richmond’s size support? Will Stone Brewing’s presence crowd out local players? Nobody knows but it’s a risk worth pondering.

There’s one other issue: Richmond apparently will be issuing $31 million in municipal bonds to help finance construction of the brewery and the restaurant. The city has finite borrowing capacity. If it borrows $31 million to back the Stone project, that’s $31 million it cannot spend elsewhere without endangering its AA+ (Standard & Poors) bond rating. This is a city, mind you, that wants to issue bonds for an $80 million baseball stadium and redevelopment project in Shockoe Bottom, $8 million to create a Bus Rapid Transit system along Broad Street, spend millions more to the city bicycle-ready for an international bike race in 2015, push ambitious housing-redevelopment and neighborhood-revitalization goals the city’s East End, support a new children’s hospital, and presumably pursue other capital improvement projects and economic development opportunities as opportunities arise.

Its good that Mayor Dwight Jones has a can-do attitude. But the city needs to pick its projects wisely. It needs to leverage its public investment to the max. And it needs to keep some powder dry for other opportunities that may appear. The best criteria to adopt when investment public dollars is this: Would I invest this money if it belonged to me? Am I maximizing  risk-adjusted Return on Investment? I have seen no evidence that the Stone Brewing deal would pass that test.


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21 responses to “Woo hoo! Giving Money to Rich, Out-of-State Capitalists Is Fun!”

  1. Cville Resident Avatar
    Cville Resident

    It would be amusing if it wasn’t so sad. Three Notch’d in Charlottesville and Devil’s Backbone in Nelson County just won national awards for their brews.

    I know an individual in mgm’t at Blue Mountain Brewery in Afton (which is now opening a second location in Charlottesville). He said business is through the roof in the area for breweries.

    And to my knowledge, none of the breweries in the Charlottesville region have received any public dollars. Richmond’s paying 31 million for Stone???????? What is going on?

  2. re: what’s going on – 300 jobs in an area with a high unemployment rate..

    it’s all about the jobs… 31 million for entitlements or jobs?

    nothing to do with craft brews… if these were kumquat smoothies.. it would work the same way.


    now.. is it reasonable and feasible? well.. no company in it’s right mind would turn down 31 million in return for a promise to create jobs… even GOOGLE and AMAZON do it!

    1. $31,000,000 / 300 = $103,333.

      You could have picked 300 people at random and sent them all to college to get their SEM degrees. Of course that would likely lead to 300 poor human beings since we all know that failure to study the humanities is a major cause of people becoming poor human beings. Oh well. At least they’d be employed poor human beings. Or, you could donate the $31M to Richmond’s proposed Crust Punk Museum. Or, spend some of it on developing a motto for Richmond. Austin has “Keep Austin Weird.” Maybe, “Keep Richmond Crappy”? I understand there are some Richmonders threatening to move out if the city gets any less crappy.

      1. re: $31,000,000 / 300 = $103,333

        that’s just one year Don… !

        you got the math.. but lack the real world meaning!

        and .. oh yes. that IS the THEORY… it’s the HOPE that planting that
        seed does create the jobs – for more than one year.

        and if it goes two-three years – it actually breaks even on the jobs vs entitlements tradeoff!

        of course the whole thing is going to opposite way the big brewers are headed – i.e. more and more beer with less and less people…

        economically, we’re trading high productivity for jobs with lower productivity

  3. LifeOnTheFallLine Avatar

    If they collect on this with all the speed and rapidity they’ve collected from the Redskins office park then we can expect the first payment sometime around the time this year’s kindergarteners graduate high school.

    I’ve asked this here before, but who exactly is Dwight Jones’ constituency? The residents of the city have come out in pretty solid numbers against moving the ballpark, but he refuses to let the idea die. We have some schools that are literally crumbling and he’s talking about lowering property taxes. The creative, artistic people have worked really hard to make a food scene and the mayor cuts it at the knees by giving a windfall to an established company.

    The Jones/Rao administrations have really been frustrating to watch. There’s a damn Chili’s in a VCU building. Grace Street no longer has a strip club or awesome sushi place or poorly lit grocery store and now there’s a bunch of chain restaurants and garbage. The noise ordinance in the Bottom was nonsense and totally disrespectful to the clubs that made it a place to begin with. I moved to Richmond because it was kind of crappy and weird and filled with crust punks. If I wanted to live somewhere filled with chain restaurants and polo shirts I would have moved to Fairfax.

    1. A Chili’s in a building at VCU? Oh the humanity!

      Grace Street no longer has a strip club or a poorly lit grocery store? If there’s one thing that proves a neighborhood is going to hell in a hand basket it’s well lit grocery stores.

      And the crust punk deficit! Where have all the crust punks gone?

      Does your Mommy know you’re using the internet again?

      1. LifeOnTheFallLine Avatar

        This frustrated lashing out you do is really unbecoming.

  4. LifeOnTheFallLine Avatar

    Oh, and thanks for reminding me about Richbrau! I used to go drink and dance there all the time. That place was the best, with the dance/pool/darts areas all separated. I was heartbroken when it closed.

    1. Well there’s my mistake. I’ve been going to bars where the pool playing darts and dancing are done in the same spot. If I’m not slipping on an errant pool ball I’m taking somebody’s eye out with a dart.

      Why did the Richbrau close? Another victim of de-crapification? Did they stupidly replace the burned out light bulbs and become well lit? Too few crust punks? Too many Polo shirts?

      Sounds like Richmond is no longer a hot spot. I hear Detroit’s still pretty crappy. Maybe relocate there? But it’s purely BYOCP – Bring Your Own Crust Punks. I don’t think Detroit has produced many pink haired vegans who stomp around the Mosh Pit listening to heavy metal music.

      1. LifeOnTheFallLine Avatar

        How many well lit dance clubs have you been to? You realize they, like bars, are intentionally poorly lit, right?

        And the crust punks usually hung out at The Flood Zone and then when that closed migrated west to Twister’s/The Nancy Ray-Gun/Strange Matter and warehouse shows.

        You’re really hammering on this polo shirt thing, it’s beginning to feel like you’re taking it oddly personal.

        Also, you do realize that one of the premiere first wave-punk/hardcore bands came out of Detroit, right? Those White Panthers of music infamy the MC5 – also known as Motor City 5. There was also the all-black protopunk band Death. And it’s punk legend that Iggy Pop did the first stage dive at a Detroit show.

    2. By the way, LifeOnTheFallLine – for what it’s worth, I think you are fascinating. Chili’s Restaurants and math majors annoy you. You like strip clubs, crust punks and dimly lit grocery stores. You used to be a journalist and you think Johnson & Johnson make wax products. Then, there’s your description of Mt Rushmore – ” … sacred, stolen land to carve the faces of a slave owner, a slave rapist, a man who wanted to send all the former slaves back to Africa and a man who encouraged whites to breed as much as possible lest they face “race suicide”

      You use words in an interesting way. You probably don’t know that you’ve posted 180 comments on this blog. Stick around, I need 20 more.


      It would be interesting to meet you in person. I’d have to insist on a well lit public place but you probably guess that. One bit of good news, I’ll be easy to recognize. I’ll be wearing a Polo shirt.

      1. LifeOnTheFallLine Avatar

        I didn’t know that I posted here 180 times, but it’s a little creepy that you do. Also, given the nature of psycholinguistics and its use of word analysis I’m sure you could run far fewer than 200 posts from here through the program and get whatever it is you’re looking for. Although, given the specialized focus of this blog maybe you’d need more to get a true cross-sampling of linguistic interaction.

        “It would be interesting to meet you in person.”

        Easy there, stranger danger.

  5. tweets Don, not blog posts. there’s a DIFFERENCE!

    TWEETS separate the men from the boys when it comes to making a succinct point or two whereas in one blog post, one can easily get to “know” the author ! From that point on – it’s just fleshing out details!

    Methinks Don wants to just see what a ‘liberal’ from Clown Show, Va looks like!

    1. Gee, LarryG – where do I work and what do I do?

      The psycholinguistics functions in Watson will work only with tweets? Fascinating.

      On Oct. 8, 2014 IBM announced 7 new Watson – based services exposed within IBM’s Platform As A Service – called Bluemix. One of the seven is called the User Modeling Service. Here is a link to the description of that service – http://bit.ly/1u9cUaW.

      “The User Modeling service uses linguistic analytics to extract a set of personality and social traits from the way a person communicates. The service can analyze any communication the user makes available such as their text messages, tweets, posts, email, and more. Users of the service can understand, connect, and communicate with people on a more personally tailored level by analyzing personality and social traits.”

      What was it Reagan said? “Well, the trouble with our liberal friends is not that they’re ignorant; it’s just that they know so much that isn’t so.”

      1. Don – tweets are 160 characters each.. while blog posts can be far larger…and have far more to analyze..


        It only took me about one and one half blog posts from LOTFL to calibrate and it was refreshing in terms of political, common sense, and rationality.

        I can certainly understand why you need more time to analyze though!


        anyone who confuses what happens with the economy and the Federal budget with who the POTUS is – does need that additional time.

        LOTFL is totally correct that the crass commercial chain business world that defines NoVa is unfortunately making inroads to Richmond!

        and further correct that the Mayor seems to be good at spending money no matter what the taxpayers think of spending it on – although I suspect what drives the fellow is to spur any/all economic activity he can muster – to provide as many jobs as he can for the unemployed who otherwise consume entitlements.

        LOTFL also has no real issues with govt as an entity -because it is flawed – as it is run by flawed people.. in other words, he’s a grown up…. unlike may these days.

        1. LifeOnTheFallLine Avatar

          “although I suspect what drives the fellow is to spur any/all economic activity he can muster”

          This may or may not be true, but the problem is it’s not really working. The Redskins training camp has not been the financial draw we were told it was going to be, and the city was initially negligent in collecting payments from Bon Secours that were promised. I see no reason to believe that moving the baseball diamond to free up space on Boulevard for retail/office development would be any more beneficial, especially given the fact that the city currently isn’t exactly experiencing a drought of available commercial square footage for lease/rent.

          I’m not against social welfare spending in either theory or practice, but if the mayor wants to spend $31M to get folks off the dole there are smarter ways to do that. Again, several schools in the district have derelict infrastructure. Take that money, turn it into a summer workforce fund for teenagers, partner with local contractors and fix these buildings. You serve at least three civic functions at once: giving people jobs, giving kids skills and repairing physical infrastructure.

          1. “I’m not against social welfare spending in either theory or practice, but if the mayor wants to spend $31M to get folks off the dole there are smarter ways to do that. Again, several schools in the district have derelict infrastructure. Take that money, turn it into a summer workforce fund for teenagers, partner with local contractors and fix these buildings. You serve at least three civic functions at once: giving people jobs, giving kids skills and repairing physical infrastructure.”

            you said it better than I…

            and I won’t mention the huge uphill you have trying to overcome.. culture…

    2. To clear up another misconception – the Imperial Clown show in Richmond (TM) refers to the elected and appointed state government of Virginia as a whole. Since there is also an Imperial Clown Show in Annapolis (TM) and the “Mac Daddy” of clown shows – The Imperial Clown Show in Washington, DC (TM) the capital city is used to distinguish among clown shows.

      There is no such place as Clown Show, Va.

      I suppose I could use the Air Force’s convention for naming whatever plane the president is using Air Force One. Any city where a significant percentage of Virginia’s elected and appointed state government personnel is meeting could be designated Clown Show, Va. For example, once a year I believe the oddballs in the Imperial Clown Show in Richmond go off to the woods to drink beer and eat shad. The town would become Clown Show, Va for a day.

    3. LifeOnTheFallLine Avatar

      HAHAHAHAHA. I think he would be sorely disappointed by the results. I’m cute, sure, but not THAT cute.

  6. That’s going to be a great bar! Hopefully VA residents/taxpayers will get a free drink or maybe a 2 for one deal. VA has now sponsored three vices for more revenue: smoking, liquor and gambling – (vices have the greatest profit margins! and the smartest capitalists take advantage). What vice is next?

    1. well, they’re raising the price of liquor and getting rid of pari mutual horse racing.

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