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Councilmembers Applaud New Economic Development Incentive for Craft Breweries, Cideries, Wineries and Distilleries

Incentive program for filling Class A and B office space expands at request of Council President Riemer and Councilmember Leventhal

ROCKVILLE, Md., Feb. 1, 2018—County Executive Isiah Leggett expanded an economic development incentive for new businesses taking office space to include craft breweries, cideries, wineries, and distilleries, which is a change requested by Montgomery County Council President Hans Riemer and Councilmember George Leventhal.

Following a Council committee discussion, Council President Riemer and Councilmember Leventhal wrote to County Executive Leggett in October 2017 urging him to expand the eligibility criteria for the MOVE (Make Office Vacancy Extinct) Program, which is part of the County’s Economic Development Fund, to include businesses that produce alcohol, beer, cider, and wine. Their request noted the importance of the craft alcohol production sector to the County’s overall economic development goals and the significant financial barrier to entry for this business sector because of high capital costs. The County Executive sent a response letter on January 24, 2018 stating that he had made the change.

“Local alcohol producers such as breweries contribute to vibrant downtowns, where workers and companies want to be,” said Council President Riemer. “Because many breweries also sell beer directly to customers who walk in, they have a retail component. As a result of the retail component, these businesses were not eligible for the MOVE new lease incentive program when taking office space. Having a brewery take a ground level office space is a win-win for the County. I applaud the County Executive for changing the MOVE program to include them. This is another strong step forward for our local production industry and hopefully one more reason for entrepreneurs in this industry to call Montgomery County the best place in the DMV to start a business.”

Initial investments for craft breweries, wineries, and distilleries can reach several million dollars, which these entrepreneurs cite as one of the largest hurdles to launching successful businesses. In return for the County’s investment in these businesses, they produce good-paying jobs and contribute to the vitality of the neighborhoods they are located in.

“This regulatory change is an example of ‘government that works,’ said Councilmember Leventhal. “Craft alcohol business owners met with their local government representatives to find a new way that we could invest in their futures and the County’s economic prosperity. In addition to creating good middle-class jobs, these establishments also help to create a sense of place in our communities. This is a win-win proposition for businesses and the residents we represent.”

Building on work initiated by the County’s Night Time Economy Task Force, the Council has worked with State legislators and local businesses to address many regulatory and legal issues associated with the craft alcohol production industry including:

  • Eliminating water and sewer connection fees for craft breweries, wineries, and distilleries
  • Allowing craft brewers to self-distribute their own products;
  • Allowing craft brewers to sell growlers;
  • Repealing distance requirements of breweries from churches and schools;
  • Extending hours of operation for alcohol licenses to 2 a.m. on Sunday through Thursday and 3 a.m. on Friday and Saturday;
  • Reducing the food to alcohol ratios for alcohol licensees to allow for more flexibility;
  • Clarifying rules to allow craft breweries and distilleries in the County’s urban and light industrial areas; and
  • Allowing craft brewers to sell more beer on-premise and allowing farm brewers to self-distribute.

More information and an application for the MOVE Program

The October 2017 request from Council President Riemer and Councilmember Leventhal to County Executive Leggett

The January 2018 response from County Executive Leggett

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Attracting more craft beer, spirits, and wine to the County

Montgomery County’s craft brewery, winery, and distillery scene is gaining momentum with at least seven breweries, three wineries, and one distillery now calling the County home. There are nearly as many in-planning, too!

Several of these businesses have opened in recent years as the County has worked closely with State legislators and local businesses to address many regulatory and legal issues. To build on this momentum, Councilmember Leventhal and I have called for opening one of the County’s financial incentive programs to craft breweries, wineries, and distilleries. See our letter to County Executive Leggett here (pdf) and below.

Cheers!


October 17, 2017

Isiah Leggett
County Executive, Montgomery County
Executive Office Building
101 Monroe Street, 2nd Floor
Rockville, MD 20850

Dear County Executive Leggett:

Montgomery County is currently home to at least seven breweries, four wineries, and one distillery. Several of these have opened in recent years as your administration and the Council have worked closely with State legislators and local businesses to address many regulatory and legal issues. Many of the successes can be traced back to the great work done by the Night-Time Economy Task Force. These successes include:

  • Allowing craft brewers to self-distribute their own products
  • Allowing craft brewers to sell growlers
  • Repealing distance requirements of breweries from churches and schools
  • Extending hours of operation for alcohol licensees to 2 am on Sunday through Thursday and 3am on Friday and Saturday.
  • Reducing the food to alcohol ratios for alcohol licensees to allow for more flexibility
  • Clarifying rules to allow craft distilleries in the County’s urban and light industrial areas
  • Allowing craft brewers to sell more beer on-premise and allowing farm brewers to self-distribute

Later this fall the County Council will be considering zoning reforms that create more flexibility for brewing and distilling uses in the County’s commercial zones. These reforms, when taken as a whole, have made the County much friendlier to local production. Nevertheless, we are presumably at the earliest stages of growth in our locally-produced beer, wine and spirits sector. The potential for this sector in the County is great.

While the regulatory climate has improved and will continue to improve, there remains a significant financial barrier to entry due to very high capital costs. Initial investments for craft breweries, wineries, and distilleries can reach several million dollars, depending on the size and business plan. Much of that capital investment is front-loaded into equipment, build out, and lease costs. We have had many conversations with current and prospective craft alcohol production companies, and they cite this as one of the largest hurdles to launching a successful business.

The craft alcohol production sector is highly relevant to our economic development goals precisely because it creates good middle-income jobs in manufacturing, management, marketing, and sales, among others. The County’s economic development strategic plan, “A Plan for Economic Prosperity,” cites the dearth and relative decline of middle-skill, middle-income jobs in the County and suggests that it is important for the County to take steps to reverse these trends to help foster a balanced economy. Statewide studies have shown that Maryland brewers alone will generate nearly a billion dollars in economic impact by 2019, contribute over eleven million dollars in state tax revenue, and capture between 7.6%-11.5% of all beer sales. Those figures are sure to rise.

Supporting the sector also furthers the placemaking goal in the strategic plan. Wineries enrich and make more sustainable our Ag Reserve, while breweries and distilleries produce placemaking and night-time economy benefits that help us attract and retain talent by helping create the vibrant urban centers many employees and employers are looking for. We have already witnessed how the County’s seven breweries, four wineries, and one distillery, have contributed to the vitality of their respective neighborhoods, but much more can be done.

Given these challenges and the great benefits this sector brings to the County, we request that your administration modify the County’s MOVE program to allow eligibility for craft alcohol production companies whose primary use of the space is production, not retail. The current MOVE program precludes their eligibility simply because these businesses have a retail component, regardless of the primary use of the space. Under our proposal, these companies would still need to meet every other requirement of the program. Below you will find our requested language to the second criterion of the MOVE program (underlined).

2. All businesses are eligible except for retail, restaurant, and independent financial or insurance agent/broker establishments. Independent agent/broker establishments are defined as a sole proprietorship that primarily sells products underwritten by a third-party.
Craft alcohol production companies (breweries, cideries, distilleries, and wineries) whose primary use of the space is production are eligible notwithstanding their retail operations.

We appreciate your attention to this matter, and we look forward working to closely with you and your administration on our collective economic development goals.

Sincerely,

Hans Riemer
Council Vice President

George Leventhal
Councilmember, At-large

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Making our zoning code more hospitable to breweries, wineries, and distilleries

Although Montgomery County’s local alcohol production industry is young and small, it has a lot of momentum. The County is already home to at least seven breweries, four wineries, and one distillery. There are, at least, four new breweries destined for Montgomery County in the next year or so. Recognizing the significant economic benefits, the County and State have already taken numerous legislative, zoning, and regulatory steps to facilitate the growth of this sector. Compared to communities in other parts of the county, however, our industry is small and our culture is nascent.

We can and should do more to accelerate the industry’s growth. The industry is relevant to our broader economic development goals because it creates good jobs and an appealing culture. Wineries have great potential for businesses in our Ag Reserve, while breweries and distilleries produce placemaking and night-time economy benefits that help us attract and retain talent by creating the vibrant urban centers many employees and employers are looking for.

This is why I introduced, with the support of seven of my colleagues, a zoning text amendment (ZTA) that would allow brewing and distilling as light industrial uses–with certain strictures on production limits to make sure that they are craft breweries/distilleries, not Bud Light factories–in the County’s commercial zones.

The current zoning ordinance’s restrictions on manufacturing in commercials zones make it difficult to open a breweries and distilleries in our urban centers, particularly if they are not attached to a restaurant. Last year I worked with the Department of Permitting Services to address to the distillery piece; we produced a policy that allowed distilling in commercial and light industrial zones under an interpretation of the artisanal manufacturing use. However, when a brewery-in-planning reached out to us with questions about zoning in downtown Silver Spring, it became clear that some changes to the zoning ordinance would be needed to make their business and others like it work.

The public hearing for the ZTA is on November 7, 2017 at 1:30pm. You can sign up to testify here.

Further reforms to zoning, regulations, and incentives are likely required to facilitate the growth of the industry. I look forward to working with all stakeholders in the coming months to address these challenges.

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A bold new vision for Bethesda

For decades, suburban communities like Montgomery County reaped the gains from choices made by executives to locate their companies outside of cities. But times have changed. Now, many entrepreneurs and workers want access to an urban lifestyle. Communities that cannot provide it are losing ground.

The good news: Montgomery County can compete in this new environment. Our beautiful neighborhoods and great schools and parks are still powerful assets. But we need to boost our urban areas for this new economy.

With this purpose in mind, I set to work on the Bethesda Downtown Plan, which we just completed. Here are some of the highlights:

New people, new life in Bethesda. The plan adds 4 million square feet of new development in the downtown area and raises heights for most buildings by 20%, reaching as high as 290 feet in certain locations. More people living in the downtown will mean better restaurants, retail and entertainment options for everyone — and the vibrancy that we enjoy will attract workers and companies to locate here.

A higher standard for affordable housing. Montgomery County continues to lead on affordable housing as the Bethesda Plan raises the requirement for new development to set aside 15% of all units for the county’s affordable housing program. Formerly the standard was 12.5% of units; I made the motion to raise that to 15% in Westbard and made sure it continued forward in Bethesda, another community that lacks affordable housing. With 4 million more square feet of development at a 15% MPDU mandate, the plan is aggressive on affordable housing.

Walkability and bikeability. New standards to promote walkability will mean more investment in safe crossings and bigger sidewalks. Continuing my efforts to champion bike lanes that are protected from traffic, the new Bethesda plan has a comprehensive new vision for biking. Thanks to a new development mitigation policy that requires developer payments for all modes of transportation including biking, we will have more resources to build this infrastructure.

Turning parking lots into parks. To be great, a downtown must have great parks and civic gathering spaces. Recognizing that Bethesda lacks them, I worked with the community and colleagues to champion a vision to turn existing surface parking lots into energetic urban parks. Where parking is still needed, we will have to put it underground. That’s expensive, but with a new park impact payment for new development, we also will have some of the resources needed to build them.

Transportation management. The Plan calls for aggressive use of another policy I have worked hard to advance: Transportation Demand Management. For a location like Bethesda, expanding auto capacity is not realistic or desirable, but growth in traffic can be reduced if we work aggressively with employers to promote public transportation, carpooling, walking and biking. The plan calls for the county to moving 50% of all trips to Bethesda to non-auto modes. We will soon get a concrete plan to achieve that.

Building community consensus. Thanks to careful attention to building heights and school capacity, the plan passed by the County Council had substantial community support while promoting strong policy goals. While surely not everyone is pleased, by working closely and inclusively with residents we achieved more than we could have otherwise.

Energy efficiency and great architecture. The new plan includes a groundbreaking requirement for energy efficiency in new buildings — one of the most important steps a local government can take to combat climate change. It also includes a new approach to sparking better architecture, something that has been lacking in the county generally.

I have no doubt that our progress on a new Bethesda is why Marriott’s leaders decided to move their company to one of Montgomery County’s urban centers, rather than DC or NoVA. And while there is good news to share, we have a lot of work ahead of us to build on our momentum.