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One polarizing brewery, six figures' worth of tax incentives
A Fingers special report on Virginia's "Project Seawolf"
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Craft breweries tend to be popular political props these days, and it doesn’t take a brain-genius to figure out why. Voters like beer, small breweries are often community hubs, and brewing jobs are hard to outsource. So I wasn’t surprised this summer when Virginia’s governor, Glenn Youngkin, issued a release heralding the arrival of a new brewery, Armed Forces Brewing Company, to Norfolk this past summer.
But the announcement also noted that Virginia “successfully competed with Florida and Maryland” to lure the “military tribute” firm here. That—coupled with Norfolk residents’ less-than-thrilled reaction to Youngkin’s announcement—made me curious enough to take a closer look. So I filed Freedom of Information Act requests with the city of Norfolk and the Virginia Economic Development Partnership (VEDP) for documents and correspondence pertaining to the deal. Which is how I first learned about “Project Seawolf.”
A beer for The Troops™️
For the uninitiated, Armed Forces Brewing Company (AFBC) is sort of a Black Rifle Coffee-style stab at a beer company. Its biggest claim to fame is probably a 2021 viral video ad1 featuring former Navy Seal, one-time Fox News regular, and brand ambassador/board member Rob O’Neill2 touting his combat bona fides and doing clunky, own-the-libs schtick about “hipsters” and wearing masks.
[Editor’s note 11/2/23 3:40pm ET: A tipster alerted Fingers that a version of AFBC’s original promotional video is still live on Instagram. It’s now embedded below.]
When I interviewed the company’s chief executive, Alan Beal, for this 2021 piece about beverage-alcohol firms pandering to conservatives, he denied that AFBC was peddling banal jingoism and right-wing culture-war tropes to, y’know, pander to conservatives. I didn’t believe that, and you don’t have to either. But the fringes of the American beer business are full of cringey marketing schemes, and all the more so when the business in question is hawking equity to unaccredited drinker-investors. (AFBC was, and is.) I filed my piece and moved on.
I hadn’t thought much about AFBC since then, but as a Virginia taxpayer, Youngkin’s release this past July piqued my interest in the firm for new reasons. What did it mean that the commonwealth had “competed” against other states to convince AFBC—which is incorporated in Delaware, and had been contract-brewing prior to this—to expand here? How much money did Virginia, already home to 344 breweries, offer this particular brewery to set up its headquarters in Norfolk? And why?
The release didn’t include specific dollar amounts, and news coverage of AFBC’s move didn’t either. So I filed Freedom of Information Act requests with the city of Norfolk and the Virginia Economic Development Partnership (VEDP) for documents and correspondence pertaining to the deal. Which is how I first learned about “Project Seawolf.”
Approximately five months before Youngkin’s release first clued me into the fact that Armed Forces Brewing Co. was a) still in business and b) headed to Norfolk, the wheels of economic development began turning at both the city and state level. According to emails I obtained via FOIA, Norfolk and VEDP officials were discussing how to attract the company to a brewery location then occupied by O’Connor Brewing Co. in the city’s Ghent neighborhood as early as February 9th, 2023 under the “Project Seawolf” heading. (NB: One of AFBC’s brands is Seawolf Brewery, which “pays tribute to the U.S. Navy, Marines, and Coast Guard branches,” according to the firm’s FAQ.) O’Connor was still operating at that point; it would announce its closure on July 7th, the same day Youngkin’s release hit the wire. It’s not clear how, when, or by whom, the facility was identified as a potential site for Project Seawolf.
“We hope you will choose Virginia”
Roughly a month later, on March 8th, VEDP business manager Will Arney emailed Beal, AFBC’s CEO, a 14-page document entitled “Virginia’s Financial Offer for Project Seawolf.” “It has been such a pleasure to work with you all and we hope you will choose Virginia for this expansion,” Arney wrote. “If you would like to have this announced as a Governor’s Press Release, we are happy to facilitate that as well.”
I’ve uploaded the entire proposal here so anybody can scrub through it, but for our purposes, the most interesting section appears on Page 2: an itemized readout of the tax incentives and exemptions Project Seawolf will unlock if AFBC meets certain requirements. All in, VEDP’s proposal indicates the brewery could access up to $308,360 in incentives funded by taxpayers in the form of foregone future tax revenue. That total is previously unreported.
The beer industry is not exactly booming lately, and neither Norfolk nor Virginia wants for breweries. This one has risen to prominence using bellicose branding and an inflammatory spokesman. So why did the state’s economic-development arm roll out a red carpet with over $300,000 at the other end of it for Project Seawolf?
A game of telephone
I contacted both AFBC and VEDP to learn more about how Project Seawolf came together. “We chose Norfolk because it's home to one of the largest military communities in the country—land of the free, home of the brave, and a terrific place to plant our roots,” Pam Catindig, the brewery’s outside publicist, told Fingers via email last week.3 She referred all questions about the incentive package to the state’s economic-development authority.
(As for the negative community response to AFBC, she said critics—including “the majority” of the members of Park Place Civic League that voted last month recommend denial of the brewery’s application for conditional use permits—“were presented incorrect information which radically misrepresented” the company. She provided no examples of this.)
Suzanne Clark, the managing director of communications at VEDP, declined multiple requests to make someone from the authority available to discuss the Project Seawolf offer. She told Fingers via email that AFBC contacted the authority in February 2023 to solicit a potential offer. (Catindig would not confirm this; Beal is quoted in Youngkin’s release saying the governor called him.) Courting breweries to expand here comports with the commonwealth’s previous success growing its food and beverage processing industry, Clark said. As for the subsidies themselves: three of the four items in VEDP’s Project Seawolf proposal are statutory “entitlement subsidies” administered by state agencies. One is not.
“Production-related” job credits
The Virginia Jobs Investment Program (VJIP) is subject to discretionary approval by Virginia’s Secretary of Commerce and Trade. Clark told Fingers that both in- and out-of-state firms face the same eligibility criteria for securing it. To unlock the $24,500 in tax credits outlined in Project Seawolf, AFBC must hire for “35 jobs, skill sets, and salaries” outlined in the deal within 36 months. Clark clarified that those roles must be “production-related,” but the brewing industry’s definition of that term—i.e., “the people who make the beer”—is not the same as VEDP’s own. “We also include HR, operations, packing, and other headquarters jobs in the ‘production-related’ category, mainly to separate them from service employees who do not qualify,” Clark said. Taproom jobs, for example, are not eligible for the credit.
Via FOIA, I obtained an employment-hiring schedule that AFBC sent to VEDP’s Arney in early February outlining the jobs it could “create” in Virginia. (You can check it out in full here.) This is what the first year looks like:
These jobs would certainly exceed the minimum listed salary requirements of the VJIP program, which dictate new hires must be paid “an entry-level wage of at least 1.2 times the Virginia minimum wage” to qualify for the credit.4 As a going concern, AFBC already has employees doing some of them—like the CEO role, filled by Beal himself—but they’re still eligible for job credits. “We incentivize net new employment to Virginia,” Clark explained. “If an employee works for the company and moves to Virginia to establish the new operation, that is new employment to Virginia.”
It’s not clear whether AFBC intends to claim the credit for these roles: it’s possible that the brewery simply listed these as placeholders. But this is the model the brewery gave VEDP to develop the Project Seawolf offer, and it’s apparently the model that earned discretionary approval from the commonwealth’s Secretary of Commerce and Trade. Clark said that “[t]he VJIP incentive amount has not changed” since VEDP tendered the offer to AFBC.
As a point of comparison, Clark referred me to the authority’s June 2023 deal with Silver Branch Brewing Co., which was offered the same $700-per-job incentive that AFBC was in Norfolk. The potential taxpayer subsidy there is much smaller—$6,300 for nine jobs—but it is indeed the same rate.5 Still, the comparison is incomplete. VEDP did not prepare a full Project Seawolf-style proposal for Silver Branch because that brewery “only qualified for the VJIP incentive and was not locating in a designated Enterprise Zone,” according to Clark. “The company was told that their production-related equipment would qualify for Sales & Use Tax Exemptions [similar to AFBC], but we did not provide an estimated value for that.”
In that light, it appears that VEDP went to some additional lengths to attract AFBC to Norfolk, such as sourcing and compiling estimates for both the discretionary and statutory incentives, and putting it all together in a comprehensive, easy-to-navigate proposal. (Not to mention assigning the effort an ingratiating codename.) That said, AFBC’s projected workforce is bigger, and it’s moving into an subsidized location, which of course pads out the grand total of potential incentives. Making a bigger deal about bigger deals makes some sense.
Comparing the vagaries of economic-development deals, though, elides a bigger question. Does offering for-profit businesses—be they “military tribute” breweries, or Amazon—these types of taxpayer-funded incentives make sense, in general? People who study this sort of thing are pretty sure it does not.
“I tend to call it corporate subsidies, corporate incentives, because economic development sounds like nice happy framing, and these deals are very much not that,”, the American Economic Liberties Project’s director of state and local policy and the author of The Billionaire Boondoggle: How Our Politicians Let Corporations and Bigwigs Steal Our Money and Jobs, told last year in an interview with . “They don't work for communities, for state economies… the research on that subject area has shown really consistently that there's no economic benefit to these deals.”
For example, one 2018 review by the W.E. Upjohn Institute, a nonpartisan nonprofit think-tank that has studied employment issues since 1945, found that at least 75% of “economic development” incentives wind up just being free money for companies that “would have made a similar decision location/expansion/retention decision without the incentive.”
Whether Armed Forces Brewing Co. would’ve relocated to Norfolk if VEDP hadn’t lined up $300,000+ worth of potential incentives for Project Seawolf is impossible to say now. Whether the firm actually cashes in on any of those subsidies remains to be seen. If it does, it’ll come at the expense of the Virginia taxpayers. At least now we know how much we’re on the hook for.
It’s not clear whether O’Neill is still involved in AFBC, and in what capacity. It’s possible the firm is trying to distance itself from its one-time posterboy. In May, he posted some bog-standard stuff about a drag queen with ties to the Norfolk community; in August, he was arrested for public intoxication and misdemeanor assault in Texas. Though he is still identified as the firm’s “national Brand Ambassador, Director of Military Relations, [and] member of our Board of Directors,” on the offering circular to investors the brewery filed with the Securities and Exchange Commissions on October 11th, 2023, he is no longer listed on its consumer-facing website. Catindig did not respond to my request for clarification on O’Neill’s current role with the company.
The first-person plural is deliberate: though she does not work at the company, Catindig has purchased shares in AFBC.
At the current state minimum wage of $14.40, and assuming 40-hour weeks and 52 weeks worked annually, that’s $35,942.40 per year. Not much!