New Belgium CEO on North Carolina incentive packages

new belgium ceo kim jordan photo

[New Belgium CEO, Kim Jordan - brewery file photo]

(Asheville, NC) – Earlier in the week, Lagunitas Brewing Founder and Owner, Tony Magee, called out New Belgium for accepting incentive packages totaling $13 million in publicly-funded financing. Lagunitas is building a brewery in Chicago (much different in scope from New Belgium’s Asheville brewery) and Magee noted earlier in the week that he has only sought private financing for the project.

New Belgium Co-Founder and CEO, Kim Jordan, wrote into BeerPulse on Thursday.

To the Readers of BeerPulse,

You can imagine that we have a different perception of the process we are going through as we develop our brewery in Asheville. First I want to line out the technical aspects of this agreement. This incentive money is incremental and thus, money that is not already part of the existing tax base. It is new money that will come in from New Belgium’s payment of property tax. The money is paid out variously by the three entities (city, county and state) through 2024. I.e., New Belgium pays its taxes annually and is reimbursed based on our investment and hiring over the course of 12 years. The money that New Belgium will get is based on performance. We are required to invest $140 million by 2024 or we will forfeit, pro-rata, any money we received. We are also required to hire 125 new people. Again, if we don’t, we get less money pro-rata.

Asheville will take in more in tax receipts with New Belgium located there than if we were not. New Belgium will pay more in property taxes through 2024 than it will receive in reimbursements which means that the area will receive more money in tax receipts from New Belgium than it spends on incentives. Property taxes from our employees and increased sales taxes would go under economic multiplier effect. City, county and state officials made this decision because when they added up the economic benefit, having New Belgium in North Carolina will be fiscally beneficial to the community. When the economic multiplier effect was included, it was even more impressive.

In Tony’s earlier post he writes that we (craft brewers?) are growing into the people we don’t want to be. In our case at New Belgium, we feel really fortunate to grow as we have. Specific to Asheville, we are developing a site that is listed as a Federal brownfield. This means it has hazardous waste issues as well as a history of being a landfill. There were easier sites to develop but we chose this site because it’s beautiful, we think we can do a lot to restore it, and we believe that breweries, classified as light manufacturing, can help revitalize a neighborhood, while providing great live-walk-bike opportunities for employees who will, in large measure, come from Asheville. The leaders of the city felt the same way and were excited to have a business with so much enthusiasm for stewarding a difficult property. This incentive money enables us to do just that.

We will also create many new jobs that will pay well above the county average. After a year, these employees will become partial owners of New Belgium through our ESOP program. (New Belgium’s coworkers own 41% of the company.) We provide full insurance and half of the cost of insuring their dependents. In addition we have a host of progressive co-worker benefits: maternity and paternity leave, adoption assistance, domestic partner benefits, paid sabbatical, profit sharing, free beer… They will also participate in a culture where open book management and an extremely high level of transparency and honesty are the norm. These are all practices that have made us well known as a great employer.

Except for Enterprise Zone credits which are a pretty pervasive development credit offered throughout the United States, New Belgium has never received any funding from Fort Collins, Larimer County or the state of Colorado. We grew organically over 21 years and that’s generally the nature of startup growth: Jeff Lebesch and I started New Belgium in the basement of our house. In the beginning we were not on the city’s radar because we were so small, by the time they figured out we were a significant presence, it was too late: they knew we weren’t moving a whole brewery! In the case of Asheville, we’re building a brewery that is nearly the size of the one in Fort Collins – all in one chunk. The agreement created by New Belgium, Asheville, Buncombe County and the state is an example of what communities are doing to attract progressive employers.

New Belgium invests in renewable energy and sustainability. In our philanthropy program we have donated more than $5 million in cash and probably an equal amount in in-kind and proceeds from events to date. We intend to continue to practice this company ethos when we move to Asheville.

I love that craft is weird. I love that craft brewers have a high degree of affection and camaraderie for one another. I am honored to be a part of the ancient tradition of brewing.

Here’s to beer and to brewers and to trusting one another to do very good work.

Kim Jordan
Co-Founder, CEO
New Belgium Brewing Company
Fort Collins, CO (and soon to be Asheville North Carolina)

Below, Jordan discusses the company’s forthcoming Asheville brewery at the time that the announcement was made back in April.

 

48 thoughts on “New Belgium CEO on North Carolina incentive packages

  1. The economic justification for the tax refund is blatantly wrong and frankly insulting. The marginal increases in residential property and sales tax base as a result of more employment will not even come close to offsetting the property tax revenue NB won’t have to pay.

    Jordan’s reply can be reduced to “Well, we’ll hire some employees from the area who otherwise wouldn’t be hired, and those people will have this new income taxed at a 7% rate, and hiring new employees makes my company so special it shouldn’t have to pay any property tax.” This type of analysis should infuriate anyone with a basic sense of fairness, unless of course that person believes they can leverage this type of analysis to benefit their own pocketbook…

    The multiplier effect for the community was probably generated by some eco-devo official manipulating assumptions from regional economic modeling software until the output was good enough to go to press. I expect a state legislator to believe that kind of publication. I don’t expect it from a savvy businessperson such as Jordan…

  2. It seems like everything I read on Lagunitas is Tony mouthing off about one thing or another that he doesn’t approve of, and feels like everyone should know that he disapproves (even though no one seems to care)! Maybe he just doesn’t realize that he is continuing to make himself look like a jackass, Maybe he doesn’t care. Either way eventually this kind of rambling is going to hurt his sales (especially with several markets raising the price of most of his beers and out of stocks everywhere). Maybe it’s time to stop focusing on everyone else and jump out of the “twitter-sphere” and start concentrating on opening up your other brewery so that you can start making new beers again, and quit just blending the same beers you’ve been making forever and calling it something new! I suppose that talking trash to other breweries who are really establishing names for themselves is a way to keep yourself relevant while you slowly circle the drain.

  3. Actually, Mole, if you had any sort of critical reading skills, you’d see that the real justification for the tax incentives are that NB is taking on the task of rehabing a federal brown site — “Specific to Asheville, we are developing a site that is listed as a Federal brownfield. This means it has hazardous waste issues as well as a history of being a landfill.”

    The tax incentives they’re getting are pennies on the dollar reimbursement for the rehab compared to the cost if the City/County/State took on the project themselves.

  4. @i liked cocoa mole but – just to be clear – you’re saying that based on the information you see and understand – all parties involved (other than New Belgium) would be better off with the status quo of nothing happening with this parcel of land and/or any development related to it?

  5. Anyone else see a problem with brewing beer on an old landfill with hazardous waste issues??? “This means it has hazardous waste issues as well as a history of being a landfill.” Asheville TOXIC IPA anyone?

  6. Actually, wmdailey, if you were familiar with the structure of these credits, you would know that the federal brownfield credit is a distinct tax credit system in place that NB can tap into by doing “environmental cleanup” on marked lands (as well as redevelopment). As you might suspect, federal benefits are not doled out by Buncombe County or the city of Asheville..

    My criticism was levelled solely at Jordan’s defense of the regional eco-devo tax incentive, the only one specifically discussed by Jordan in this piece (the technical details are spelled out in paragraph 1).

    Federal brownfield redevelopment and cleanup is one story (that NB will not have to pay for, thanks to the federal benefits). County-level tax incentives towards the vague, lofty goal of improving a regional economy is another. Perhaps my original comment could be made more fair and accurate by reducing Jordan’s *entire* statement (not just the part dealing with the tax incentive I personally criticized) to:

    “Well, we’ll hire some employees from the area who otherwise wouldn’t be hired, and those people will have this new income taxed at a 7% rate, and hiring new employees makes my company so special it shouldn’t have to pay any property tax.

    *If you don’t believe that, please remember that we are also renovating a federal brownfield. However, I won’t bother to mention that we can get further tax benefits that are specifically tailored for that purpose. If I had included that information, it might be more clear that the brownfield categorization is very irrelevant to the tax credit I am presently defending. You may have noticed this irrelevance if you looked up the resolution adopted by Buncombe County which does not mention environmental concerns — but does, interestingly, make it ABUNDANTLY clear that: “the Company has informed the County that if the County does not provide those economic development incentives, the Company will not locate the Project at the Facility”.* ”

  7. To JB: Tricky question; largely revolves around relative value assessments and much easier for me to answer because I don’t have any “skin in the game” that local officials have. Given that caveat, to me, the fairEST outcome (to be 100% clear, I don’t pretend to think this is the only “fair-ISH” outcome) would be a company coming in and accepting federal brownfield credits to clean up and redevelop the area, without needing to cripple the growth prospects of the regional tax base by accepting the local credits.

    Your implied hunch that NB coming in and refusing to put any of its property tax money into the regional economy could be marginally better than nobody ever coming in for environmental cleanup purposes COULD be true, so I don’t know that I would criticize them for the package they accepted per se (no matter how much I despise the way Jordan chose to frame this particular piece, which I find THOROUGHLY intellectually dishonest to the extent that I commented on this website for the first time in my life — what a lame way to start, I know).

    But, that argument really only works if every other company that might develop the area in the future would only do so if given supplemental regional tax breaks on the level that NB is receiving. Thus, the L criticism (as I understand it) that the company should be willing to provide that benefit to the community and pay its share of property tax for the benefits it derives from the local work force and services is an incredibly fair criticism — especially given my (cursory) understanding of L’s recent expansion practices.

  8. Jeez man, I thought beer was a thing you shared with a friend, maybe clinked glasses when someone said something funny, and otherwise enjoyed as a beverage. I don’t remember when brewers attacked other brewers. NBB is bringing back a site, and helping a grateful city develop its future. That sure seems like a great thing to hate on, what a fantastic display of character. Someone needs a pacifier, and maybe some powder on their tushy.

    You go Kim, leave the haters to wallow in the mud.

  9. All of my friends, and I know a lot of beer drinkers, are very excited to have New Belgium coming to Asheville. It will be a win- win matching a great company and a great beer town.

  10. I live, own a business, and pay taxes in Buncombe county and I spend money in Asheville daily. I welcome NB wholeheartedly. The area they are going to be developing is a wasteland, filled with abandoned warehouses and aging metal sheds. They are going to help transform this dilapidated ghost town of an area by the river to a nice greenway which connects to the cities growing River Arts District. Sneak peek here: http://www.ashvegas.com/new-belgium-sneak-peek-at-what-new-brewery-will-look-like .Our beautiful city, already a well known sight seeing tourist destination, has also become a destination for beer tourism with 14 outstanding breweries (and counting). The additions of New Belgian, Sierra Nevada, and Oskar Blues to the area has really brought that to the forefront around the country. Those tourists bring dollars, buy things in other local businesses, stay in our hotels and pay taxes on all of that. They also bring much needed non-tourism and non-service jobs to this area. The view of the local population is almost overwhelmingly in favor of these great companies coming here. While our regional economy (The greater Asheville, Buncombe county, Henderson county area) is relatively strong, it relies too much on tourism dollars. The addition of the type of light manufacturing that these companies do will help to diversify that. Finally, when large companies that are known for progressive practices (in hiring, benefits, sense of community, etc) like these move to an area it makes other businesses take notice and maybe they will consider our beautiful area if they expand or move. So as a tax paying resident of Buncombe county I see this as a win, win. We all will benefit.

  11. It’s not like the land was being used for anything else more beneficial, it was a landfield. I don’t understand why everyone is griping, the city and county reviewed the data and decided that they could forgo the property tax revenue in favor of increased sales tax revenue, income generation for their residents, and the revitalization of a previously unused area. It’s not like they’re tearing down a historical register to build the place, they’re taking on an extra burden to use undesirable land and the local government is compensating them in the form of tax breaks. The government isn’t giving them any money, they’re just not making them pay as much as they normally would. It’s pretty easy economics actually, the local government can get no tax revenue or they can get some. I don’t think the externalities of a company rated as one of the most environmentally friendly in the US are really going to be costing the people more than the benefits of a huge influx of jobs, revenue, spending power, and community spirit. I appreciate Tony’s opinion but don’t think others should take it as policy. No one gets really upset at Volkswagen when a county gives them tax credits to build a factory and you don’t hear Volvo execs whining about it either, craft beer is an industry, and as much as competition is usually friendly, at the end of the day you’ve got a run a business like a business and I’m sure the employees of New Belgium (i.e. it’s stockholders) and the drinkers (its stakeholders) will all benefit greatly in the long run. Hat’s off to Kim for dealing with the issue directly, frankly, and with great candor.

  12. I think I should have written: New Belgium will pay more in property taxes through 2024 than it will receive in reimbursements which means that the area will receive more money in tax receipts from New Belgium than it spends on incentives. Property taxes from our employees and increased sales taxes would go under economic multiplier effect.

  13. Craft brewing is right now, these coming few years ahead, at an inflection point and we are in danger of becoming what we set out not to be. I’ve made no personal comments, although others have. And about Brewers v. Brewers, well… This is about privatizing profits while socializing risk… The elephant in the room is that a good-sized brewery would not ‘need’ this, they just preferred to use other peoples money since they could. Having principles is expensive and craft brewing is in danger of becoming who we set out not to be.

  14. I say that unless you live in Asheville or Buncombe county, and this is a direct impact on your home and or life as a community member, then you need to keep your mouth shut and mind your own.

  15. +1 to crass2112 and my vote for best portfolio would go to NB. Lagunitas makes great beer but NB’s Lips of Faith series gives them the edge.

  16. I will make a simple comment. Magee is on the other side of the country, was Lagunita’s considering Asheville? Are his feelings hurt? I met a L brewer during GABF last year and there was a discussion about glassware. The brewer said “It’s just a F@*$ing beer, drink it out of a glass”. That really turned me off to the brewery. Those 2 things really make me steer away from the L brand.

  17. Pingback: New Belgium CEO responds to Lagunitas criticism over incentive package in Asheville | Ashvegas

  18. Oh boy, here we go again! I wish Tony would just concentrate on his own problems and stop worrying about everyone else. How about stocking his pond here in California and stop blaming his wholesalers for his OOS. I’ve never seen a worse partner in craft. His people in trade give craft a reputation and his rants only compound the problem.

  19. If I start up a business, I go to the bank and get a loan. I don’t ask for government handouts or tax credits. Just saying – I accept my own risk.

  20. This is a local issue. period. The city and state will earn tens of millions of dollars in new property tax from the brewery, income tax and residual sales tax, not to mention benefit from a landmark attraction on our riverfront. The return on public investment is clear, explaining why incentives are commonplace in every state in the union. Welcome NB to town! Where do I apply?

  21. Tony – please give it a rest. While I don’t know all the EXACT specifics here (and I seriously doubt you do either), questioning New Belgium’s ethics is really unjustified considering their history and practices.

    And I say this as I just finish my last Undercover Investigation Shut-Down of the season.

  22. Richard, not once has Lagunitas Brewing blamed wholesalers for OOS. Read Tony’s twitter.

  23. I don’t see how this can’t be seen as anything other than a win-win for NBB and the city. The city will benefit for many many years to come and it’s just good business for NBB to set up shop in a place that wants them there and is willing to accomodate them with tax incentives, infrastructure improvements, etc…It’s just good business for both parties. If Lagunitas would rather do it with private funds then that’s great too, but don’t cry about how some other brewery worked a better deal somewhere else.

    Regardless, nice pic :)

  24. Irony…Lagunitas SUCKS (Holiday Ale) is the only beer that doesn’t SUCK from Lagunitas.

  25. @i liked cocoa mole @wmdailey

    I STRONGLY suggest both of you get some lives. You are going around arguing with complete strangers in the comments section on Internet articles. I feel bad for both of you since you two obviously have nothing going in your lives.

  26. Does anyone here, those in favor of subsidies as well as those who will never drink Lagunitas again, believe that in the absence of subsidies the brewery would never have been built at all? You can be sure that it would have. In that case, the lovely town of Asheville would have been…maybe… even better off? I think so. Ive not mentioned anybodys beer but I am talking social policy. Craft has the potential to change the larger model by example. We will all live in the future that we create today. Id like that to include lower government debt, solvent cities, low taxes, social services, and an end to crony capitalism. The same company that shepharded this project called me when I announced chicago. They offered to bring all the same goodies to our project and I declined prima facia. This conversation has been sad and It has included ‘reputation defender’ posters as well which is even sadder. I’ll not revisit this thread. Cheers.

  27. Quit your crying McGee. You sound off and the responses you receive are”sad”? You have a bad disposition pal. Just shut up about others and others will shut up in regards to you. I’m pulling all your handles and switching them out to New Belgium.

  28. Tony finally put his big boy pants on and conceded to his ill chosen lyrical fight. Long live NB in beer city USA!

  29. Tony, I can no longer respect you! I think you have great sales reps. and good beer but I think you have a Narcissistic Personality Disorder! Why don’t you just stick to making beer. FYI I will no longer support your brewery! I now have pulled 3 Lagunitas handles and have given the to NB.

  30. Congrats! To Lagunitas for practicing freedom of speech. Congrats! to NB and Asheville for helping increase the availability of NB products. Everyone has a choice. NC chose to make an offer to NB making it an attractive choice. Lagunitas chose to move forward with no gov’t help. To each their own.

  31. Little hard to justify taking taxpayer money in any form in the tough times with the debts at state and national levels ever growing. Also is it right in a free enterprise econmy to take tax money in one jurisdiction to compete with non subsidized business in the same arena? Sounds like a taxpayer’s should support everyone equally or not at all doesn’t it? Sounds like someone has a “pure” vision for their business and someone else has just a “business” vision.

  32. I say more the beer the better! Granted I’m on the outside looking in, but New Belgium seems like a great company that treats people and the planet right. I’m all for that!

  33. Personally, I don’t care how they got to North Carolina. As long as they keep brewing that GREAT BEER I could care less what incentives the state gave them. I just wish Georgia had stepped up to the plate and we could add them to the other great craft brewery’s here in Atlanta like Sweet Water and Red Brick just to name a few.

    They are an outstanding company with a great philosophy for doing business. Sounds like just a lot of haters because they are doing well and expanding. Keep up the good work and bring on more great beer offerings here in Atlanta. I hope you will offer a wider variety of beer options once your brewery gets up and running. Personally, I am craving more of your winter brew 2 Below.

  34. @Blyguy, I think you need to read the definiton of the word Democracy. Granted, our forefathers wanted this to be a Republic, but hey, it is what it is.

  35. Pingback: New Belgium Responds to Lagunitas | That Brew Dude

  36. Blah, Blah, Blah, I am so done with New Belgium beers. Reading this statement is insulting and repulsive. Just admit why you did it, I would have more respect for you; you did it to maximize profits off the backs of someone else’s labor. Taxes that could have been used to educate, improve and make lives safer will now be diverted to offset that which would still have existed and provided the same benefit to the area without the disinterested public having to participate. Now schools, police, libraries, fire departments, road repairs crews, and on and on will have a little less money to work with. Irregardless of whether or not you took the tax breaks, if you had moved to the area, all the benefits you touted as providing would still have been created. And as far as your charitable contributions, let us not forget that they are tax deducible. It’s almost like you’re double dipping in the taxpayer pool, while high-fiving yourself on your great karma.

  37. If it means Ohio has a snowball’s chance of getting NBB, then we’re all for it! Not having easy access to Fat Tire is our biggest dismay since moving from Colorado!

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