(Updated on Aug. 27 — The public hearing has been scheduled for 5 p.m. Friday, Sept. 6 at the South Hill Business Campus, 950 Danby Rd. Ithaca.
ITHACA, N.Y. — Ithaca Beer Company has asked the Tompkins County Industrial Development Agency to freeze its tax abatement for the next five years to get back on solid ground after a large, unexpected expense put them out hundreds of thousands of dollars.
The revised abatement would save the company $323,000 in property taxes. Members of the public will have the opportunity to weigh in on the proposal at a public hearing before a formal vote.
Known widely for its flagship Flower Power IPA, Ithaca Beer Company brews more than 20,000 barrels of beer a year and sells to more than 40 wholesalers in 15 states. Though business in local markets and the taproom is going well, a representative from Ithaca Beer Company said in a statement, they are encountering increased competition in today’s “turbulent craft beer market.”
The freeze would be part of a larger financial restructuring and five-year plan at Ithaca Beer Company, Heather McDaniel, administrative director of TCIDA, said at the IDA meeting Wednesday. McDaniel said the company had to put in a sewage pre-treatment facility this year, which was a “significant cost they were not planning on.”
The sewage pre-treatment facility cost Ithaca Beer Company about $350,000, a company representative said at Wednesday’s meeting. The company had to research and construct a pH adjustment system, which was implemented in the spring. At the same time, Ithaca Beer Company is dealing with decreased sales in a craft beer market that has been growing increasingly competitive in recent years.
The demand for craft beer has been steadily growing, and the number of craft breweries has grown considerably in recent years. According to the Brewers Association, the number of small, independent breweries, microbreweries and brewpubs increased to 7,346 in 2018. In that year alone, 1,049 new breweries opened and 219 closed, according to the association’s data.
In a letter to TCIDA, Dan Mitchell, who founded Ithaca Beer Company in 1998, said they have seen a downturn in business due to the increased competition in the market. That paired with the buildout of a new wastewater treatment facility has caused “financial strain” resulting in the need to reduce expenses. He wrote the most obvious place to do that is in payroll, which he wrote he would like to minimize.
“We have been able to restructure our debt, which was necessary, and we have changed some of the ways we go to market. These moves have put us in a better situation, but we still need some additional help. If you would consider putting a freeze on our tax abatement for the next five years, we will be able to stabilize our finances, and reduce some additional debt, allowing us to be on solid ground again,” Mitchell wrote.
While the company has faced major challenges, Martha Robertson, TCIDA member and Tompkins County Legislature chair, opposed putting the burden on taxpayers.
“You want taxpayers to pay for an unexpected expense,” Robertson said. She said the mission of TCIDA is to help businesses get started. “These are real dollars to the taxpayers … I’m glad we’ve supported Ithaca Beer a couple of times, no question about that. I regret that you have an unexpected expense. I don’t think we’re in the business of continuing to support every business that comes to us when they have a rough patch. I just don’t think we can do that.”
McDaniel said emphasized that the IDA’s mission is also about creating jobs.
“This is a company that was started and grown in Tompkins County and grew every year over the past 20 years,” McDaniel said. She added that when Ithaca Beer Company was building its current building and getting permits, they were not aware they would need the pre-treatment facility, and if they had known, they would have built it in with bank financing.
“They’ve come up with a five-year plan that keeps them financially stable,” McDaniel said. “I wouldn’t have brought this if I thought we were just bailing them out … or asking taxpayers to pay for their mistake. I don’t think there was a mistake. Ithaca Beer is exactly the kind of company that we want to stay here and to grow here and to welcome into the community for the work that they do here.”
Ithaca Beer Company would save about $323,000 if the amended PILOT goes through as proposed, according to documents included the Wednesday’s TCIDA agenda.
Before TCIDA votes on the abatement freeze, members of the public will have a chance to weigh in. The agency unanimously approved a public hearing. The public hearing has been scheduled for 5 to 6 p.m. Friday, Sept. 6 at the South Hill Business Campus, 950 Danby Rd., Ithaca. Then, TCIDA will likely vote on that matter at the Sept. 11 meeting.
Gregg Stacy, director of marketing at Ithaca Beer Company, said in an emailed statement ahead of Wednesday’s meeting that they are asking the IDA to provide them with relief to get through this turbulent time in the industry.
“The net is that we are working diligently and creatively to continue competing in this very challenging time in the craft beer industry. The very good news is that we’ve been successfully innovating our product offerings and constructively making appropriate adjustments to our production and sales processes to in order to keep us competitive. We also have plenty of room to grow our local market business and have already begun doing so,” Stacy said.
Reporter Brian Crandall contributed to this article.