What's Made Brooklyn Famous (Has Made a Loser Out of Me)

Sunday's New York Times brought word of the latest twist in the saga of New York's Brooklyn Brewery and its president Steve Hindy, purveyors of various fine beers, including the great Black Chocolate Stout. Back in 1996, Hindy and partner Tom Potter set up shop at a former matzo ball factory in the Williamsburg section of Brooklyn, then a mostly rundown industrial neighborhood but today a thriving hipster paradise, replete with bars, gourmet shops, and luxury condos. The only problem is that now the brewery can't afford to stay. So Hindy looked to city officials for help:

He and his partners are willing to spend $15 million for a bigger brewery that would employ at least twice as many workers as he has now and would have a beer garden where customers could sample his growing roster of specialty brews. But after four years of searching and two failed bids to be included in redevelopment projects in Red Hook and Carroll Gardens, they have not found a suitable building in the borough at a feasible price.

[…]

Mr. Hindy has plenty of company in the hunt for affordable industrial land. Manufacturing space has become scarcer and more expensive as city officials have encouraged developers to replace crumbling factories and warehouses with amenity-laden condominiums.

As the Times notes, Hindy had been a vocal supporter of Mayor Michael Bloomberg's controversial 2005 rezoning of Williamsburg and neighboring Greenpoint, a process he now says left him in the dust:

We have seven more years on our lease in Williamsburg, and we would love to stay in this neighborhood. We worked hard in support of the administration's rezoning of this area in the hope that it would include "industrial zones" that would enable us to stay here among the residential zones that were enabled on vacant industrial land.

The industrial zones that finally were approved included language allowing hotels and other commercial businesses to locate here. One property adjacent to our brewery just rented for between $15 and $20 a foot. It will house a performance space and a bowling alley…. It is hard to make money brewing beer on land that rents for $20 a foot. Property owners are hoping that eventually they will be able to claim hardship and get their properties rezoned for residential.

There's a cautionary tale or two here about getting in bed with city officials and their shady real estate allies, but the worst of it has been Hindy's support for controversial developer and New Jersey Nets owner Bruce Ratner, the driving force behind the atrocious Atlantic Yards project, a massive boondoggle that, if realized, will produce a taxpayer-subsidized basketball arena for Ratner's Nets along with various office buildings and luxury complexes that will displace more than 40 business owners and tenants via eminent domain and other measures.

Still, what do you expect from the wolf's lair of New York's corrupt and massively regulated real estate market? As Hindy admitted to the New York Observer last year, "Things like the development at Coney Island and things like Atlantic Yards—that's what we have to work with, and we have to make the best of it."

Comments

[P Brooks]

It's tough to feel sorry for this guy.

Sucker.

[Mo]

Yeah, there's no sympathy for him from me. However, yet another reason to hate hipsters.

[joe]

If the buildings are worth more as condos than as factories, it's not the regulation that are keeping this guy from finding the space he wants. He's not complaining that his use isn't allowed, but that other uses are not banned.

Your anti-zoning poster child is arguing that the city should adopt zoning that forbids property owners in a certain area of Brooklyn from having the choice of developing commercial and residential uses instead of industrial ones.

[Brian24]

I get the same feeling as joe. Gentrification has these kinds of effects. What he's asking for is government zoning to make land cheaper specifically for him.

[MP]

$15 million would go a lot farther in Los Angeles.

[Brian24]

Furthermore, it's all well and good to rail against hipsters, but hipsters are the ones who started buying his beer in the first place.

[Episiarch]

Screw him. Maybe he could say "it's my factory being here that helped make this place valuable again", but even so, too bad. Move to Queens or the Bronx and do it all over again there*.

* yeah, right

[Damon Root]

Thanks to all for the comments. Just to be clear, I'm not holding Mr. Hindy up as some sort of anti-zoning hero. Re-read the post if you thought that that's what I meant.

[Eric S.]

Brooklyn Brewery = East Coast New Belgium Brewing Co. (Fat Tire)

[KipEsquire]

"Entrepreneurs, like the ones who plan to turn the warehouse next to the brewery into a bowling alley, are willing to pay far more for space, Mr. Hindy said. He said the rent on the brewery started at $3 a square foot and has risen to $9. He estimated that the bowling alley would pay about twice as much, a price that he said would be prohibitive for a brewery."

Yup, that's always the problem with capitalism: those damn entrepreneurs!

[Joshua Corning]

Your anti-zoning poster child is arguing that the city should adopt zoning that forbids property owners in a certain area of Brooklyn from having the choice of developing commercial and residential uses instead of industrial ones.

Holy shit!!! Joe is right!!!!

Looks to me like the housing market pushed out the brewers more then zoning or the city did.

Are we to think that the libertarian position is that industry never changes and changes in land use markets are always a product of government meddling?

Either root did not connect the dots here or he is just wrong.

[Brian24]

Sorry, Damon. We're just used to the standard storyline behind Hit & Run posts (Meet this Man/Woman. Here's how the gov't is screwing them).

[J sub D]

$15 million would go a lot farther in Los Angeles.

New York is too expensive? Move.
Let me put in a bid for Detroit. We could use a quality brewer in this town. Cheaper than LA LA land too.

[libertymike]

"There's a cautionary tale or two here about getting in bed with city officials and their shady real estate allies.."

Yeah, you become rent seeking scum.

[libertymike]

Joe-

You nailed this one. My man.

[Lamar]

It's just another case of the reason a place becomes cool being priced out of the area by people who come in and are so in love with themselves that they need no reason other than their presence to think the place is cool which is the reason that the place is no longer cool.

That's just my subjective opinion, of course. Williamsburg: remember when people there actually did stuff, instead of just dressing like the people who did stuff there 10 years ago?

[stephen the goldberger]

Their Black Chocolate Stout is incredible. Every other beer they make is awful. I had some golden something ale when I went there, it remains the worst beer I have ever had.

[Lamar]

Man on the street says, "hey hipster." The hipster turns around and says, "I'm not a f*cking hipster."

And the Brooklyn Brewery is a second-rate beer garden. Try the Bohemian Hall and Beer Garden, it's filled with actual non-aviator sunglass wearing people, unless they've taken over in the last year.

[libertymike]

Epi-

If Joe, yourself amd yours truly are on the same page....we probably shouldn't quaff Black Chocalate Stout.

[MP]

Best quote from Hindy's extended whine:

If the city really wants light manufacturing jobs, why can't it develop more incentive plans for companies that expand and create more manufacturing jobs?

In other words..."Subsidize me!"

Dude, STFU and stop going to the Government in an effort to have it manipulate the marketplace to your benefit.

[joe]

Feeling the love!

Believe you me, if the area was viable for industry such that there was adequate demand to fill the buildings, the City Council, of all people, would not have changed the zoning to res-com.

City councilors love to save the blue collar jobs that the neighborhood people work in, or used to work in. City councilors know that industry pays a lot more in taxes than it costs in services, while residences are the reverse.

It pretty much takes a cattle prod to get city councilors to admit that the shoemakers aren't going to come back to the old industrial district in the city center.

[joe]

Dude should just open up a pub in the neighborhood, and move his brewery somewhere more appropriate. He could probably get some suburb to offer him a nice financing package to move into one of their industrial parks.

[Xmas]

Time to grow and expand. Open a restaurant/beer garden with a show-piece brewing vat. Move the bulk of your brewing operations to someplace more affordable.

Brooklyn is a big, big, big place. There should be someplace they could afford.

[schmedly]

Moral of the story: if you want to make designer beer in NYC, sign a hundred-year lease, with an opt-out clause if people start drinking wine again.

[Paul]

What he's asking for is government zoning to make land cheaper specifically for him.

Right, just like eminent domain transfers to private parties: It's a condemnation of properties that makes it cheaper for the developer than it would if the developer had to make dozens of individual parcel deals.

[matt]

"Their Black Chocolate Stout is incredible. Every other beer they make is awful."

Are you kidding me? Their lager is one of the best American lagers - it's one of the regulars on my (far too extensive) list.

[Paul]

He could probably get some suburb to offer him a nice financing package to move into one of their industrial parks.

Word.

Might even get the city to eminent domain a modest group of homes as he'll certainly bring in more tax revenue. He should start drawing up a carefully considered plan.

[joe]

Actually, eminent domain land assemblies aren't about lowering the dollar cost of the land. The sellers, even the unwilling ones, usually end up getting much more than their land is worth, because the city wants to avoid the hassles and delay of going to court.

Eminent domain is about making those purchases possible, not making them cheaper.

[joe]

Might even get the city to eminent domain a modest group of homes as he'll certainly bring in more tax revenue.

Uh, yeah, that's precisely how that works.

No, not really, but if you only read Reason magazine, you could end up with that impression.

[Brandybuck]

This isn't just gentrification, it's government managed gentrification. That's what the redevelopment was. Play around with the tax structure, condemn random buildings, evict long-time leaseholders, and voila! Instant chic neighborhood! It's sort of like tweaking the SimCity RCI indexes, but with real peoples' lives at stake.

[Paul]

The sellers, even the unwilling ones, usually end up getting much more than their land is worth, because the city wants to avoid the hassles and delay of going to court.

Eminent domain is about making those purchases possible, not making them cheaper.

Yes, yes it is. It was, is and always will be. The reason a business wants to be in a particular place is they find the location businessworthy. They could move further out and probably not ED land, and/or buy one large parcel of land. But that costs too much or adds too much indirect cost to doing business. Going to court and dealing with long delays adds to the cost of doing business. ED greases the wheels, speeds up the process, and gets them the particular parcels of land they desire thus lowering the overall cost of doing business.

[joe]

Paul, you think that buying one large parcel of land is MORE EXPENSIVE than buying up lots of little parcels?

Um...no.

They could move further out, but eminent domain speeds the proceess?

Um...no.

They want a particular parcel of land in a particular location, but buying that land instead of something in a less desirable location costs less?

Um...no.

You have strong feelings and principles, Paul, but you don't understand the subject very well.

[joe]

If you need land that's in a particular location to make your business work, securing that land instead of some other piece isn't a cost issue, Paul.

[Geo8rge]

Fear not, when the economy collapses his fancy beer business will come to an end, his brewing equipent will be sold as scrap and converted to Chinese electrical wire. Everyone will go back to drinking Bud.

My guess is he could find cheaper diggs somewhere in the tri-state area. Leaving the marketing in BillyBurg of course.

[jtuf]

On top of the NYC real estate problems, the Highlands land management plan is making it difficult for people to escape to the fringe of the NYC region.

[Naga Sadow]

Joe,

Your point is incidental. It's not about what they can get for the land. It's what the land is worth to them. Taking someone's land while stuffing a little extra money in their pockets is just a way to make the elected officials who took the land in the first place feel better.

[steveme]

joe,

First, simply stating "um...no" is not effectively advocating your position.

Second, even accepting that your position is valid; what gives a developer a superior right to the land than the current owner?

Finally,although I haven't read the Kelo decision in a while, I believe the basic holding was that if a developer will increase the tax revenue then e.d. is o.k.

[joe]

Naga Shadow, steverne,

I'm not arguing the morality of it, just explaining the developer's interest. They most certainly do not go for eminent domain-involved projects because they're cheap, but because the land, once assembled, is desirable.

I believe the basic holding was that if a developer will increase the tax revenue then e.d. is o.k. Not quite. "Economic development" was the public purpose the city identified, but it went well beyond mere tax revenue. The project was supposed to be the equivalent of building an industrial park, except instead of manufacturing facilities and office buildings, they were banking on hotels, resorts, restaurants, and entertainment venues. The goal was to create jobs and attract investment to the city, as well as increase the tax roles. I don't think a taking purely on the grounds of "this guy will build a bigger house and pay higher taxes than the current owner" would have flown, with tax revenue being the only purpose of the project.

[Jesse Walker]

If no one else is going to link to it, I will.

[steveme]

joe,

You are right, I did oversimplify. The decision was even more atrocious than I remember. As the majority seems to indicate, and the dissent points out, it seems that the public use requirement may be met simply by showing the area would have greater aesthetic value.

[sixstring]

Thanks, Jesse. Jerry Lee is underappreciated.

[Legate Damar]

I like their brown lager. Of course, I like every brown lager I come across, so that's not an exclusive club.

[robc]

I dont know why everyone was saying joe was dead on right when he was dead on wrong. "Your anti-zoning poster child"? WTF?

Okay, everything else joe said was right in that post, but that was so wrong that it invalidates all his bonus points.

[crapass mcgee]

A Steely Dan reference: "Brooklyn Owes the Loser Under Me"?

[Douglas Fletcher]

If he was smart he'd start making beer that appeals to people who go to bowling alleys. You know, like Stroh's.

[Warren]

Your anti-zoning poster child...

Is there a name for the fallacy of repeating your opponents arguments, point by point, and then claiming, your opponent meant the exact opposite when he said the same thing?

Zoning is nothing less than a tool of tyranny.

[joe]

Wah wah wah, joe's right but I still hate him.

[robc]

Douglas Fletcher,

When Im at a bowling alley, it pisses me off that I cant get decent beer. I would bowl more often if they carried a better beer selection.

Garrett Oliver (brewmaster at Brooklyn) is one of my favorite brewing personalities. His book The Brewmaster's Table is awesome.

[Isaac Bartram]

Eminent domain is about making those purchases possible, not making them cheaper.

I've lost track of the number of times I've written something like that here. Nobody listens to me either.

But it's also true that the land the government entity has EDd ends up being sold to the favored developer for a song and the taxpayers pick up the difference in exchange for promised economic benefits that more often than not do not appear.

[,]

Guys at my high school used to drink beer all the time. It's no big deal.

[meeko]

sorry joe, you are talking shit...

Paul, you think that buying one large parcel of land is MORE EXPENSIVE than buying up lots of little parcels?

Um...no.

Um...yes. Because, if i don't want to sell, or i want to make fortune on the sell, they will use ED and provide me with lets say double market price, where i wanted, and i had the right, 'cos, you know, it's my land, ten times the market price.

They could move further out, but eminent domain speeds the proceess?

Um...no.

Um...yes. If i don't want to sell, that means they will never get my land, while using ED, they will get it. So i don't know how it works in your reality, but in mine never vs. in few years means speeding things up.

They want a particular parcel of land in a particular location, but buying that land instead of something in a less desirable location costs less?

Um...no.

Um...yes. 'Cos if they get the parcel ED way, it may cost less, than if they had to obtain another piece of land, where ED would not work that easy or not at all, but this is more connected with the hidden cost of something like lawyers, bribing the council and so on and is questionable.

So, please, stop accusing someone from not knowing, especially when you are the one not knowing in the first place.

[Invisible Finger]

Back in 1996, Hindy and partner Tom Potter set up shop at a former matzo ball factory in the Williamsburg section of Brooklyn, then a mostly rundown industrial neighborhood

Yeah, there's just no rundown industrial-zoned neighborhoods anywhere in the New York area anymore.

[Douglas Fletcher]

...I still hate him."

Yeah, me too.