October 14, 2015
The Stone Brewery Development Project: Power and Key Players
In October 2014, the Richmond Economic Development Authority put its bid in to bring in Stone Brewing Company to the city of Richmond, Va. This bid included $23 million in city money and around $5 million from the state. Stone Brewery accepted their bid, denying bids from cities such as Columbus, Ohio, and began plans to create a brewery and bistro in the Historic Fulton neighborhood. This brought a backlash from local restaurants, claiming that the city, as well as the state, was unfairly dishing out tons of cash to Stone, while not dropping a dime on anyone else. This paper analyzes the level of power which the Richmond Development Board had over the citizens and business owners of the Richmond community.
During the research for this essay, I looked at multiple newspaper articles. Majority of them are from a newspaper called the Richmond Times-Dispatch, while a few were from CBS 6’s website. These articles were dated between early October of 2014 and October of 2015. These illustrated a slightly murky but overall comprehensible story of what happened during the approval and beginning of the Stone Brewing Co. project. Any fact checking for the names of members of the EDA board was done through the EDA’s website.
Results and Backstory
After winning the bid in October, the Chairman of the Economic Development Authority and Stone Brewery signed a lease in December of 2014, amid local criticism. Many restaurant owners spoke out against the deal, as well as the lack of transparency accompanying it, at a local meeting to discuss it during December, but the city council still approved the lease. The lease came with a rent of $148,545 a month if the project hits it $23 million dollar mark. This business deal was estimated to bring “300 jobs and be a $74 million investment” into the East End.
The problem is that the EDA board lacked significant transparency with the City Council. In January and February of 2015, when the lease needed to be reworked, the EDA went into closed sessions that ended in a rescinding of the original lease and instead allowed the Chairman of the Board to sign a modified lease. This lease, which was released in March, stated that the EDA knew that the initial cost estimate of 23 was too low. The EDA, in the new lease, laid out each party’s responsibilities. According to the Times-Dispatch article, “if the costs were to rise by $4.6 million […] Stone could potentially provide up to $3.5 million to cover any overruns, but the authority would have to pay back the money with interest”. Several members of City Council was not made aware of this until the lease was released almost a month later.
There are five key players in this situation: the Richmond EDA, Stone Brewing Company, the City Council, business owners, and taxpayers.
The EDA board possesses the most power, even over City Council. The EDA seem to have ultimate convert power, stating that the lease could not be viewed because of exceptions to the Virginia Freedom of Information Act for contract negotiations. The reason given for this withholding is that all documents are under negotiation until signed by both parties, and public view of the documents could give one party “a competitive advantage” according to Lee Downey, the Director of the EDA8. According the article explaining the EDA’s process,
“In its public votes, the EDA often votes only to authorize its chairman to negotiate and sign documents at an undetermined point after the meeting. Because the documents themselves are not available at the time of the vote, it’s difficult to know exactly what the authority’s board is approving.”
The EDA is also the ‘landlord’ for Stone Brewing Co. The lease states that the EDA will fund the building of the new brewery, and that Stone will rent it from them for 25 years, at which point, Stone will purchase the brewery for a certain price. As the landlord, the EDA will most likely have overt power over Stone Brewing.
Stone Brewing Co. seems to have the second most amount of power. They have latent power over the EDA, as they have influenced them with the promise of new jobs and a large amount of revenue with the location of their brewery and bistro. City Council as a whole did not seem to have much power, however certain members seemed to exhibit convert power over citizens. Business owners had no power in the decisions, as well as citizens.
Although there are no readily available specifics, it seems as though the EDA, who ended up making all of the decisions in this case, was not elected by the people, but instead appointed by the mayor. With a decision such as this, which is supposed to help the citizens of Richmond, it seems shady to have people who were not chosen by the citizens making this decision. This is probably the most blatant example of the amount of latent power that the mayor has over the decisions made regarding economic development about the city.
ECD Staff Directory. (n.d.). Retrieved October 14, 2015.
Hipolet, M. (2014, December 8). Richmond restaurant owners speak out against city funding for Stone Brewing. Retrieved October 14, 2015.
Moomaw, G. (2014, February 23). Stone official says action is “imperative” as council delays vote. Retrieved October 14, 2015.
Moomaw, G. (2014, March 14). In brewery deal, documents stay secret while awaiting signatures. Retrieved October 14, 2015.
Moomaw, G. (2014, March 18). Council wasn’t notified of higher costs for Stone project, members say. Retrieved October 14, 2015.
Moomaw, G. (2014, December 18). EDA approves lease with Stone Brewing. Retrieved October 14, 2015.
Moomaw, G. (2015, February 10). Authority votes to change Stone Brewery lease. Retrieved October 14, 2015.
Moomaw, G. (2015, March 17). Stone brewery costs will exceed $23 million estimate. Retrieved October 14, 2015.
Rolett, B. (2014, October 9). City makes pricey promises to land Stone Brewing. Retrieved October 14, 2015.