Tuesday, March 3, 2015

The Stone Brewing Boondoggle

One of my all time favorite Millenials posted an article on Facebook the other day concerning a City Hall fight brought on by the Stone Brewing riverfront property deal. Because he is a Millenial, I assumed he did so to protest the worthlessness of petty politicians standing in the way of progress. I assumed that like most Millenials, he thought that nothing could possibly be cooler than having yet another micro-brewer in town. When I asked him his actual opinions on the issue, I discovered the truth in the old admonition that assuming often makes asses out of you and me. My favorite Millenial was very much against the notion that local governments should get involved in picking winners and losers in business. He sent me to a Wall Street Journal article which essentially made the following point.

Imagine that you are an aspiring entrepreneur in Richmond 25 years ago who decides to refurbish a dilapidated old warehouse building downtown and turn it into a restaurant. You do so at great expense and considerable risk, since no one is sure whether an upscale restaurant will survive in such a parking challenged location. Despite considerable headwinds, your dream becomes a thriving reality. Twenty five years on, your enterprise is a profitable business which pays lots of taxes to the city treasury while employing 140 people. You are a vibrant, responsible corporate citizen who contributes much to the city.

Then one day, you discover that your city council has entered into an agreement with a California company to build not only a brewery but also a giant restaurant who will be in direct competition with you. The deal hammered out offers them not only massive tax relief, but also includes building said restaurant with public money, out of the taxes that your twenty five year old enterprise has faithfully paid. Not only that, your shiny new competitor is given a sweetheart twenty five year lease. The best part is that if this new enterprise fails, your future tax payments will be required to bail the city out of the deal. 

The owner of the Tobacco Company Resturant might reasonably ask why his city council is getting in the upscale restaurant business. He might also wonder where all of this tax relief and free construction money was twenty five years ago when he was building HIS building. The fact that my favorite Millenial understands the innate unfairness of such an arrangement renews my confidence in his generation. Maybe it will be the Millenials who will apply some hard-headed rationalism to government boondoggles like the Stone Brewing deal and ask the question, is this really what the people's representatives should be doing?