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San Diego City Council Approves Tax Incentives To Help Breweries Expand

The City Council Monday unanimously approved a package of incentives that will help San Diego craft brewers Ballast Point and AleSmith move into larger manufacturing plants.

Under terms of the deal, increased tax revenues created by the larger facilities will offset various municipal fees the brewers paid to renovate and move into the new locations in the Miramar area.

Both plan on opening full-service restaurants, tasting rooms and gift shops — along with being able to produce a lot more beer than they can now.


The new facilities will be between 105,000 and 125,000 square feet — among the largest in California.

While San Diego has become nationally known for its craft brewing industry, none of the individual companies rank among the biggest producers.

In a ranking of craft brewers by the amount of sales in 2013, Ballast Point ranked 29th while AleSmith was not in the top 50.

However, the city's Russ Gibbon said tax revenues from all of the craft brewing businesses in town increased by 300 percent from 2011 to 2012, and another 50 percent from last year to this year.

"This is a thriving industry for San Diego — it's part of the innovation economy,'' said Councilman Mark Kersey, who represents the district.


"This is a key export for our region.''

About three years from now, the companies should each generate about $50,000 in annual sales tax revenue, far in excess of what was paid by the previous occupants of the properties, according to city staff. Before then, around $160,000 in fees paid by Ballast Point and $175,000 by AleSmith will be reimbursed.

City officials said Ballast Point plans to add 100 jobs, while AleSmith will add around 25 positions to start with. On top of that, each project to prepare the new facilities will employ 25 construction workers for one year.

Ballast Point has been making beer in a 23,000-square-foot plant in Scripps Ranch and, according to founder Jack White, brewed its first beer in the new building last week. City officials said its only alternatives to expand were the Miramar location or a spot in neighboring Poway.

Public facilities like the restaurant should open in August, White said.

AleSmith is creating similar facilities, and will continue to make specialty cheeses for retail sale.

Twenty-two breweries and 19 brew pubs now operate in San Diego, and three other breweries are under construction, according to the city.