Fort George Brewery seeks tax break for expansion

By: Edward Stratton - Oct 26, 2019
Source: The Astorian

First use of enterprise zone

Fort George Brewery is seeking a 15-year property tax break worth an estimated $617,000 for an expansion at Astoria Warehousing.

It would be the first tax incentive approved under the Clatsop Enterprise Zone and the first long-term reduction in rural Northwest Oregon.

Enterprise zones provide companies property tax breaks on qualifying investments. A standard enterprise zone offers tax relief for up to five years, requiring at least $50,000 in investment and the creation of one job.

Fort George wants a long-term rural enterprise zone offering up to 15 years of tax breaks in exchange for at least $12.5 million invested and the creation of 35 jobs. By the fifth year, each job created would have to earn, including benefits, 130% of Clatsop County’s average annual wage, currently around $37,000.

Chris Nemlowill, the co-owner of Fort George, and local and state officials involved in enterprise zones met Thursday night with elected leaders to discuss the company’s plans.

“It’s very important to us,” Nemlowill said of the tax break. “We purchased a large amount of property that really needs a lot of work, and we’re going to have to invest a lot of money back into the property to … clean it up and make it a place where we can create all these jobs.”

Fort George, which has grown to more than 160 employees, has used other tax incentives and urban renewal funds to help invest in the renovation of its Duane Street campus. It worked with Business Oregon to install a canning line, promising to create 14 full-time jobs and adding 36, Nemlowill said.

Enterprise zone

Fort George received a $12 million low-cost loan from U.S. Bank for its purchase and expansion into Astoria Warehousing through the federal New Markets Tax Credit program secured by regional lender Craft3 for investment in high-poverty rural areas. The company is also benefitting from a $1 million grant approved by the state Legislature for cleanup of historical contamination at the site.

The brewery plans to move most of its brewing, canning, cold storage and distribution to the main building at Astoria Warehousing. It is buying a 60-barrel brewhouse from the shuttered BridgePort Brewing Co. in Portland, building out an 11,000-square-foot cold storage and eventually adding a 4,000-square-foot taproom in another vacant warehouse looking out on the Astoria Bridge.

Nemlowill said all those projects pencil out to the $12.5 million required investment. He is confident Fort George will have the demand for 35 jobs, saying that some of the old Astoria Warehousing employees have expressed interest in coming back to work for the brewery.

Clatsop County, Warrenton and the Port of Astoria originally approved the Clatsop Enterprise Zone in 2015. The Astoria City Council, which initially rejected the enterprise zone over mistrust of the Port, expanded it last year to include most of the city’s waterfront and support the development of North Tongue Point by Hyak Maritime into a shipwright hub. Hyak has yet to apply for a tax break.

All four partners in the Clatsop Enterprise Zone must vote to accept a written agreement for Fort George’s request, Astoria City Manager Brett Estes said. Astoria and Clatsop County, the two entities overlaying the Astoria Warehousing property, would then approve the company’s application, he said.

The 15-year property tax break for the new equipment and taproom would cumulatively cost more than $617,000 in revenue through 2035, according to the county. Over that time, county taxing entities would still receive more than $1 million in property taxes on the Astoria Warehousing buildings, growing from nearly $57,000 in 2021 to more than $86,000 in 2035.

The question is whether officials believe Fort George would make the investments without the tax incentive, Astoria Mayor Bruce Jones said. If not, then county taxing districts aren’t ultimately losing something they wouldn’t have had otherwise, he said.

Uncertainty at business park

Warrenton City Commissioner Rick Newton commiserated with Nemlowill over the money Fort George has spent trying to build a distribution campus at the North Coast Business Park, saying the tax break is a way to help ameliorate those losses.

“I think we would be foolish not to back you,” Newton said.

Fort George bought 10 acres at the county business park in 2016 for a new distribution campus. The county commission last year approved a 40-acre conservation easement in Warrenton to help the project move forward. But Fort George saw the cost of building there balloon to $10 million, and Astoria Warehousing fit better with the company’s background of repurposing old buildings, Nemlowill said.

Fort George has all the permits to build in Warrenton, but isn’t sure what it will do with the property, Nemlowill said. It plans to sell or lease its current warehouse in Warrenton, where there is interest in a food hub, he said.

Kevin Leahy, the director of Clatsop Economic Development Resources and manager of the Clatsop Enterprise Zone, lauded the value of supporting homegrown entrepreneurs like Fort George that invest in their communities.

“The most successful businesses are really the ones that have the expansion,” he said.