Business
Idaho Beer Brewers Balk at Belgian-Brazilian Boys
December 16, 2014 
A bar fight is brewing between the local craft beer producers and the big multi-national Anheuser-Busch Budweiser boys who recently acquired 10 Barrel Brewing at 9th and Bannock in Boise.
Idaho Beer and Wine Distributors Association, which represents 18 distributors that employ 900 people says Idaho law grants special rights to small breweries – which include every Idaho-based brewery – but not to large ones such as Anheuser-Busch, the maker of Budweiser and Bud Light.
The outcome should be interesting because the 10 Barrel building is owned by the Idaho Land Board and it leases tax-exempt space to the craft brewer. The board spent several hundred thousand dollars doing “tenant improvements” for the brewer in exchange for a 15 year lease.
If the Alcohol Beverage Control boys –read that “Idaho State Police”– decide 10 Barrel is acting illegally under the new ownership, it could put the Land Board lease in jeopardy. We expect the poor folks at the Attorney General’s office will be forced to advise both the State Police and the Land Board.
We’d bet a beer the ultimate ruling will favor the big Belgian-Brazilian beer brewer over the locals.
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Comments & Discussion
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Dec 16, 2014, 11:04 pm
Well they form an LLC and all is well.
Dec 17, 2014, 2:02 pm
The Land Board (State of Idaho) has no business being in the commercial real estate business, so this never should have happened in the first place. So now, select interests operate with the huge benefit of being property tax free. Not that I’m in favor of property taxation – but this kind of tilted playing field is nonetheless unfair and gives those who get sweetheart deals an unfair advantage in the marketplace. It was wrong for 10 Barrels to get it; it’s wrong for Anheiser Busch to get it.
Dec 17, 2014, 2:15 pm
Another ingredient in the brew-ha-ha is A-B’s huge presence in eastern Idaho, where it is a major consumer of Idaho barley, might also be a major consumer of Treasure Valley hops—not sure haw many jobs those adds up to.
Dec 17, 2014, 3:40 pm
Casmir,
What tax benefits are the businesses getting? I’ve never heard of a renter paying property taxes.
EDITOR NOTE–Property taxes are typically wrapped into a “triple net lease.” Taxes are paid by the landlord, but in this case, the public property is TAX EXEMPT, making a lower rent possible and screwing the local city, county, highway district, and schools out of ALL tax revenue on the property.
Dec 18, 2014, 11:19 am
Let’s expect the 2015 legislature will amend the law to allow for the 10 Barrel situation.
A big business owning a small business…. the underlying business is still a small company.
Dec 18, 2014, 11:23 am
(d) Any brewer licensed within the state of Idaho who produces fewer than thirty thousand (30,000) barrels of beer annually, upon payment of a retailer’s annual license fee, may be issued a brewer’s retail beer license for the retail sale of the products of his brewery at his licensed premises or one (1) remote retail location, or both. Any brewer selling beer at retail or selling to a retailer must pay the taxes required in section 23-1008, Idaho Code, but need not be licensed as a wholesaler for the purpose of selling beer at the brewery or at one (1) remote retail location.
(e) Any brewer licensed within the state of Idaho who produces fewer than thirty thousand (30,000) barrels of beer annually may be issued a brewer’s pub license. Upon payment of a retailer’s annual license fee, and subject to the fees in sections 23-1015 and 23-1016, Idaho Code, a brewer may, at his licensed brewery or at one (1) remote retail location, or both, sell at retail the products of any brewery by the individual bottle, can or glass. Any brewer selling beer at retail or selling to a retailer must pay the taxes required in section 23-1008, Idaho Code, on the products of his brewery, but need not be licensed as a wholesaler for the purpose of selling beer at the brewery or at one (1) remote retail location.
(f) A brewer licensed under the provisions of subsection (d) or (e) of this section may be licensed as a wholesaler for the sale of beer to retailers other than at the licensed brewery and one (1) remote retail location and shall not be required to pay an additional fee. Such brewer shall, however, comply with and be subject to all other regulations or provisions of law that apply to a wholesaler’s license, except as the laws may restrict sales at the licensed brewery or one (1) other remote retail location. The holder of a brew pub license shall not be disqualified from holding a retail wine license or wine by the drink license for the sale of wine at the brew pub premises on the grounds that the licensee is also licensed as a wholesaler.
Dec 18, 2014, 11:24 am
We can probably all agree, Idaho’s alcohol laws are dumb and need to be overhauled.
Dec 18, 2014, 12:11 pm
I’ll drink to that!
Dec 18, 2014, 2:06 pm
GUARDIAN,
Not so fast. While you may be correct that the 10B location is not producing property taxes, there is another side of that coin. 10B creates a lot of jobs (think payroll tax) that would not otherwise be there. Further, 10B is something that the people of Boise city want in their community – the place seems to always be full. This creates a environment where people will come and spend money on other businesses nearby. Finally, your short-sightedness ignores the fact that 10B is better than the alternative = an empty building.
I’ll certainly raise my glass to an overhaul of Idaho’s protectionist alcohol laws.
EDITOR NOTE–Can’t argue one way or the other about your assertions, but your logic is clouded by too many raised glasses. Fact remains local taxing entities get screwed out of property tax revenue when the state owns the building. Even an empty building has to pay taxes. The solution is for the state to pay “fees in lieu of taxes” on their commercial properties. Imagine what would happen in places like Challis, Cascade, etc. if the State came in and owned a significant portion of the downtown core…those places would go broke. The MAJORITY of state-owned commercial real estate is in Boise. Unfair burden on Boiseans!
Dec 19, 2014, 11:27 am
BoiseB, it’s funny that you make the statement (as a lot of people do) that renters don’t pay property taxes. The triple net lease is obvious. The indirect payment in a RENT payment is pretty obvious too.
Do you also believe that if a corporation has to pay more in corporate taxes that some how that tax won’t be passed on to the consumer?
Or maybe, if a business has to pay more for employee wages, the consumer won’t end up paying more?
Totally unconnected, eh?
Dec 19, 2014, 11:30 am
Guardian, I like your example of the state coming in and owning chunks of a small town like Challis….
kinda like the federal government owning a significant chunk of Idaho land.. no taxes.
The feds pay “payments in lieu of taxes”… why not the state too?
Dec 23, 2014, 2:02 pm
OK – I agree – state ownership of the building is not ideal.
Nonetheless, there can be no dispute that it has been a very successful venture benefiting everyone. The cost in lost property taxes is unfortunate, no doubt, but for the jobs created and product added, it’s worth it.
I agree that a private party should have purchased the building, made investments in improvements, worked out the tenant deal, etc, but no-one had the wisdom or balls to do that, so (thankfully) the State stepped up.