The City Council's Economic Development and Intergovernmental Relations Committee tentatively approved tax reimbursements for San Diego craft brewers Ballast Point and AleSmith Wednesday that will encourage the companies to move into larger manufacturing plants in the city of San Diego.
The plans now head to the full City Council for approval.
Under the agreements, the city will reimburse the breweries for the additional tax revenue the city would have received from each expansion project. Additionally, the city would give back 50 percent of future sales tax at the location, until they have paid back the breweries for the municipal fees they have to pay to move into their new facilities. This reimbursement for the Ballast Point brewery is worth about $156,000.
But City Councilman Mark Kersey stresses that this incentive package will not cost the city anything.
"All it's doing is crediting money we would not have had but for the expansion project," he said.
The city expects the Ballast Point reimbursement will be finished in three years. And then the city will collect about $50,000 a year in taxes, compared with the $15,000 a year it currently collects in taxes on the property.
Kersey said the city is still finalizing the details of the incentive package for AleSmith.
Ballast Point was looking to expand from its 23,000-square-foot plant in Scripps Ranch, and in mid-2013 began considering moving outside the city of San Diego to Poway, Kersey said. Then the city found out the Van Can Company was planning to close its 106,000-square-foot food can manufacturing plant on Carroll Way in Miramar.
"So we were able to work with Ballast Point and put together this package that included this economic development agreement, which is a very useful tool that frankly we just haven't utilized in over a decade," Kersey said. "So getting this as part of the package was definitely a key to them staying in the city of San Diego."
After its expansion, which includes a restaurant, patio and gift shop, Ballast Point's new facility will be 124,667 square feet, making it the largest brewery in San Diego County and sixth largest in the state, according to an Independent Budget Analyst report. The expansion will allow the company to produce 350,000 barrels of beer a year, making it the fifth largest beer producer in California behind Anheuser-Busch, Miller Brewing Co., Sierra Nevada Brewing Co. and Lagunitas Brewing Co., the report said.
The Ballast Point expansion is expected to create about 100 permanent jobs, as well as construction jobs, Kersey said. The AleSmith expansion is estimated to create at least 25 jobs, according to a city staff report.
"This is a great deal for taxpayers and the city of San Diego, and the reason is because we're having a company that is a national leader in the craft-beer industry, and they've always been in the city of San Diego, and we want them to stay here," Kersey said.
Kersey said he would like to offer these economic incentive packages to other companies as well, not just breweries.
"I'm a huge craft-beer proponent and supporter and consumer, but this could just as easily apply to biotech," he said.
During the committee meeting Wednesday, Councilwoman Sherri Lightner said another deal like the ones for Ballast Point and AleSmith may be coming soon.
According to a city staff report, these economic incentive deals have been provided four times in the past, but not since 2001.
There are 22 breweries and 19 brew pubs in San Diego, and three other breweries are under construction, the report said.
In May 2013, the City Council approved a measure to let large craft beer makers (at least 12,000 square feet in size) add larger full service restaurants or tasting rooms to their beer making facilities.
