I’ve been doing some pontificating, pondering and research on the recent deal arranged by Pinehurst to bring Railhouse Brewery from Aberdeen to Pinehurst. Prior to Railhouse securing ANY property in Pinehurst, village leaders secured $200,000 in tax dollars from the state to help with renovating the old Pinehurst Resort steam plant on Magnolia Road.
For the record — I am not questioning the integrity of the brewery owners or that of the business itself. I am raising some important questions about the way Pinehurst village government has handled this whole arrangement.
ZONING EXEMPTIONS. On February 28, the village council held two not-so-widely publicized hearings on zoning exemptions for the steam plant property. The village is seeking a waiver for signage requirements at that property as well as on-street parking at the property. Can anyone recall the last time the village acted unilaterally to grant zoning exemptions to ANYONE in Old Town (or any other part of town)? Perhaps this can be chalked up to a change in attitude — a denazification, if you will — within village planning and zoning. (Remember, the ABC store fled downtown because village staff would not let them erect a canopy on their building.)
I contacted Mayor Nancy Fiorillo about the zoning changes, and she agreed things could have been handled “better”:
”I will admit that the Village could have done a better job when putting forward the amendments needed to make the project work. In the future, we should wait for the announcement of any grants, then make appropriate amendments. That would be much more transparent. We’re learning.”
TAX DOLLARS FOR A PRIVATE BUSINESS. It has been reported that the village secured $200,ooo in tax dollars from the North Carolina Department of Commerce to help pay for the purchase and renovation of the steam plant building. In addition to THAT money, the village will be spending $252,000 on landscaping, roadwork, and paving in the vicinity of the steam plant property. Village leaders have sold that separate expenditure as part of developing NewCore. When you examine the area where the work is planned — and look at project sketches — the landscaping and paving appear to pretty much benefit the steam plant property. So, nearly a half million in tax dollars has been committed to a deal where NO REAL ESTATE TRANSACTION has yet occurred.
GOVERNMENT PICKING WINNERS AND LOSERS. With this deal, The State of North Carolina and The Village of Pinehurst have put themselves in competition with area realtors, bars and restaurants. I spoke with a couple of realtors who were sore about the fact that they could not compete on this deal because they didn’t have $450,000 in project funding to pitch in.
I am sure I will get some hysterical emails about this next statement, but here goes. Railhouse Brewery is basically a bar that makes its own beer — not unlike The Sly Fox on Broad Street in Southern Pines. Some Railhouse fans have told me Railhouse is not a bar, but a manufacturer that happens to have a “tasting room.” But if you check their web site, Railhouse is promoting upcoming live rock band performances as well as a cornhole tournament. (You know, the kinds of things you typically have at A BAR.)
Village leaders tell me the steam plant deal will allow Railhouse to open a restaurant, as well. Restaurants and bars are some of the riskiest business enterprises to operate. Most of them fail within a few years. Banks tend to shy away from providing significant loans to these types of establishments. (Railhouse has been in operation since 2009.)
There are a number of existing businesses within downtown Pinehurst where you can go out for dinner or an adult beverage. How fair is it for these existing establishments — which have started up and thrived on their owners’ and employees’ sweat equity — to now have to compete against a newcomer to town, funded generously by the taxpayers, that does basically the same thing they do?
The state grant requires EIGHT full-time jobs. It is my understanding Railhouse has FOUR full-time employees that can be counted toward that figure. The business is currently located in Aberdeen, and one would assume most all of its employees already live in Moore County. So, where is the bang for our investment of $452,000 in tax dollars?
BUSINESS AND POLITICS. According to Pinehurst village government’s web site, the steam plant renovation project for Railhouse is being handled by the Hayter firm. If you’ll recall, a political action committee called The Village Action Team (VAT) was quite active during the last round of Pinehurst village elections. The VAT marketed and raised money for candidates Mark Parson, Nancy Fiorillo, and John Cashion — all of whom currently sit on the Pinehurst Village Council. According to official campaign reports, Robert Hayter — principal of The Hayter Firm — was treasurer and principal for the Village Action Team.
It is not a new practice for government to throw money, incentives, tax breaks and other goodies to businesses that move into their jurisdiction. It is an expensive practice that often leads to a bigger tax burden for existing residents of the jurisdiction. An environment is created where there is little loyalty from recipient businesses to a locale, with recipient businesses keeping one eye out for the next great economic development offer from other locales.
When government funds an incoming business that already has competitors within its jurisdiction, government is doing some serious, inappropriate meddling in the free market. Consumer demand has typically done a great job of deciding who needs to live — and who needs to “die” — in the business world.
If government officials want to encourage business growth and development, the best things they can do involve cutting regulations, cutting taxes, behaving reasonably, and basically getting out of the way.