THE GIST
Genesee Brewing’s latest step toward completing a $50 million expansion project has rankled a number of New York lawmakers. Specifically, upstate officials are angry with the company for investing in foreign equipment over locally made goods, despite the fact that the brewery has been incentivized with economic funding from the state. They say the 139-year-old Rochester brewery should’ve sourced the equipment from a local factory, given that the state is offering millions in grants and tax credits for the project. Instead, the company bought and is importing 12 fermentation tanks from China.
WHY IT MATTERS
According to the Associated Press, Genesee is “eligible for about $10 million in grants and tax credits from the Empire State Development fund” as it relates to the company’s ongoing expansion. The credits, however, are redeemable through job creation and other goals and don’t apply to tank purchases, the AP notes. So the company is well within its legal rights.
Meanwhile, some area lawmakers are peeved and believe such deals should require local investments. Lawmakers such as assemblyman Anthony Brindisi of Utica who said this, in a statement obtained by the AP:
“It disgusts me to know that state economic development dollars were used to support a project where goods were manufactured in China, when we have companies like Feldmeier Equipment that produce products like this right in the Mohawk Valley.”
It’s worth noting, we have a bit of a he-said/she-said thing going on here. Genesee claims to have reached out to Feldmeier for a bid on the 12 tanks and was turned down. Feldmeier says it submitted a bid for a smaller portion of the project and the brewery turned that down.
Regardless, the ordeal shines a light on how these types of deals might unfold in the future.
Economic development arrangements have become increasingly common in the craft brewing space, as smaller breweries embark on multi-million dollar expansion projects with seeming regularity. It's no surprise: the craft brewing space has proven a viable economic engine. So in turn, politicians from all over the map have been tripping over themselves trying to get in on the fun. And that's been good—or at least interesting—PR!
But as these deals continue to proliferate, it’ll certainly be worth paying attention to what kinds of requirements states put in place to ensure maximum economic value locally, now that we’ve seen a deal backfire a little bit. In this case, Gov. Andrew Cuomo and the economic development agency are currently being criticized because the Genesee deal lacks any requirements that the investments also benefit New York businesses. So how will states avoid this in the future? And what will it cost brewers?
—Dave Eisenberg
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Lawmakers Criticize Brewery Expansion Over China Made Tanks [Associated Press]