You may have to pay more for craft beer thanks to higher tax values in Charlotte
A big increase in commercial property tax values could mean you’ll pay more for a pint of craft beer at your local brewery.
Thanks to the county’s recent revaluation, property tax values at the buildings housing Charlotte’s popular breweries are soaring. At Heist Brewing, it’s up 146 percent. At NoDa Brewing, it’s up 132 percent. Those increases will likely mean higher tax bills for the breweries.
“I can only speak for NoDa Brewing but significant property tax increases would inevitably mean increases in the cost of our products to consumers. We are able to absorb small and modest adjustments, but not ones of this size,” said Todd Ford, who owns NoDa Brewing along with his wife Suzie.
Throughout Charlotte, commercial property values increased more than 70 percent since the county’s last revaluation eight years ago. That far outpaced the 43 percent rise for residential properties countywide.
Neighborhoods just east of uptown, such as Belmont, Villa Heights and NoDa, saw commercial property value increases of 200 to 320 percent, according to an Observer analysis of the data. Those communities border the light rail extension, which runs from uptown to UNC Charlotte.
To be sure, breweries don’t always own their buildings. But through their rents, they would likely have to absorb higher taxes that result from any incremental property value rise.
“From our standpoint, those percentage increases were reflective of the demand (in those areas),” said Ken Joyner, a tax assessor for the county.
That does not necessarily mean that tax rates will increase by the same amount, since county commissioners and the City Council set the new tax rates separately from the property values. But properties with increases above the median rate of 70 percent will almost certainly see their tax bills jump, experts say.
Rob Speir of Colliers International, an industrial real estate broker, said he’s never before seen property value increases like the ones Charlotte commercial properties experienced during this year’s revaluation. Speir has worked with breweries such as Triple C, Sugar Creek and Bold Missy in securing leases.
Higher property taxes will affect commercial property owners and renters alike, Speir said.
“Unless the property owner disputes it, the tenant is going to be absorbing those costs. That’s definitely an unforeseen expense,” Speir said. “I would imagine the appeals process is going to be intense.”
Brewery operators wouldn’t necessarily notice a higher tax bill in 2019, Speir said, but rather in 2020, after the landlord had reconciled their operating expenses for the year.
NoDa Brewing moved into its 32,000 square-foot building on North Tryon Street in 2015. NoDa’s building is nearly three times the size of its original spot on North Davidson. The brewery needed more space as the business grew to house its large production equipment, Todd Ford said.
Ford said he discussed the property valuation with his landlord, Harris Development Group, to determine whether they should dispute the revaluation. Ford said they likely won’t do that.
“Given the attention to that area … the revaluation was probably pretty accurate,” Ford said. “Unfortunately what that leaves us with is waiting to see what tax rates will be.”
Other nearby brewery property values have similarly soared.
Catawba Brewing in the Belmont neighborhood saw its value rise 175 percent. The Free Range property skyrocketed 632 percent, according to the revaluation.
Part of the explanation for Free Range’s is that the property’s owner, Ram Realty Advisors, is building a 250-unit apartment building and parking deck on the same site as the brewery. The property’s new $29.9 million valuation reflects the new building, said David Klepser, Ram’s lead developer.
Klepser said Ram may file an appeal with the county.
“We evaluate all of our properties every year with tax consultants to determine which ones are worth arguing for a lower value. We’re going to spend a lot more time digging into all of our properties,” Klepser said.
Higher property taxes would be another blow for Free Range, which has struggled as construction cramped its business over the last few years. Besides the apartment building going up next door, Free Range’s building was also gutted to make way for a number of new tenants, including Rhino Market.
“We’ve been in difficult conversations about our business because of construction over the last two years. This (property revaluation) is another layer we haven’t even gotten to,” said Jason Alexander, co-owner of Free Range.
As the Observer has reported, oftentimes brewery development in Charlotte is a catalyst for other growth in gentrifying neighborhoods. As breweries open in places like South End and NoDa, apartments, restaurants and other tend to retail follow.
Despite the potentially higher taxes coming for commercial properties in trendy neighborhoods near uptown, Speir doesn’t anticipate it’ll dissuade new breweries from opening.
“In general it feels to me that although rents and expenses have been going up, it hasn’t slowed down the allure of Charlotte to breweries,” Speir said.
“In my opinion (brewery development) really has become location centric. And developers love to be near breweries.”
This story was originally published March 20, 2019 at 6:44 PM.
