Economic Development, Food Service & Agriculture, and Government

Founders Brewing gets $430K tax break from city

December 4, 2012
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Founders Brewing plows ahead with expansion plans
Founders Brewing is the rated the second best brewery in the U.S. by Ratebeer.com, and several of its beers are listed among the top 100 beers in the world by Beeradvocate.com. Photo via fb.com

Grand Rapids city commissioners agreed Tuesday to award the Canal Street Brewing Co. a 12 year industrial tax abatement that will save the company almost $36,000 a year on its $6-million expansion of Founders Brewing Co. at 235 Grandville Ave. SW.

Mike Stevens and Dave Engbers, owners of Canal Street Brewing, are investing $1 million into real property and $5 million into personal property, namely production equipment, for the project. They’re getting set to expand Founders Brewing by an additional 9,000 square feet, which would give them space to brew up to another 165,000 barrels annually. Stevens and Engbers hope to get construction completed by March.

City Economic Development Director Kara Wood told commissioners that Founders Brewing has had “significant growth” over the past five years following its move from the Brass Works building on North Monroe Avenue, its first location, to the Grandville address owned by Locus Development. This latest project is the third time Founders has expanded since 2010.

Wood also said the brewer has increased its brand recognition over that time frame and is ranked as the 42nd largest craft brewery in the world.

“Founders distributes its products to 23 states. The brewery is regularly ranked as one of the best in the country in various polls and has beers consistently ranked in the top 10 in the world,” she said. 

Founders began distributing its products to Maine, New Hampshire, Connecticut and New York this past summer.

“When the Grand Rapids Art Museum features its next history of beer, it will prominently feature Founders Brewing,” Mayor George Heartwell said.

Stevens told the Business Journal in November that he and Engbers are grateful to have a good financial relationship with Huntington Bank.

“Founders has become a capital-intensive business. We’re fortunate to have a partner that can keep up,” he said of Huntington.

Wood said Founders Brewing plans to add another 20 employees to its current workforce of 77 once the expansion is finished. She said the average wage for the new workers will be $20.60 an hour with a benefit package worth about $5,000 a year. Planning commissioners approved the firm’s construction plan earlier.

The tax exemption commissioners granted, which amounts to roughly $430,000 over its lifespan, will serve as a match for $2 million in financial assistance Canal Street Brewing has requested from the Michigan Economic Development Corp. The state considers beer making as a manufacturing industry, which qualifies brewers for an industrial tax break.

The city will lose $12,635 in property-tax revenue each year for a dozen years from the exemption but will gain an estimated $8,570 annually in new income-tax revenue from its action.

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