Before Choosing a Beverage Manufacturing Location: 5 Questions
Choosing the location for your new Florida brewery, winery, or distillery is a big moment in the life of your beverage business. Before making a final decision, answer these five questions about the location.
1. Can this Location Be Used for Beverage Manufacturing (and Drinking)?
Making beer, wine or spirits might not be a permitted use for the location’s zone. Even if it is a conditional use within that zone, the cost of complying with the required conditions might make the location unworkable.
Florida cities are usually subdivided into distinct zones, and local zoning ordinances control how property can be used in each zone. Making beer, wine, or spirits might be limited to commercial or light industrial zones, while operating a taproom or tasting room (a retail establishment) might be permitted in commercial or residential zones.
For each zone, the zoning ordinances might indicate that an activity is permitted unconditionally, permitted with conditions, or not permitted. If beverage manufacturing or operating a retail establishment is a conditional use in the location’s zone, the zoning ordinance or zoning officials will determine the specific conditions that will apply. The conditional use process often requires one or more fees to be paid to the local government and might require a hearing before a local board. Providing a good, clear explanation for the process of making beer, wine, or spirits–and how it is similar to other permitted uses–is the key to getting conditional use approval for the location.
2. Is this Location Far Enough from Schools, Churches, and Bars?
Having a taproom or tasting room at the location might not be permitted because it is too close to a school, church or bar.
Most Florida cities require that beverage retailers–including taprooms and tasting rooms–be at least a certain distance from schools, churches, and bars (sometimes residential areas as well). The distance requirement might be as close as 200 feet (not so bad) or as far as 2,000 feet (really bad). Not 2,000 feet in a straight line, however. The separation requirement is usually measured as the shortest distance a pedestrian must walk using appropriate sidewalks and crosswalks. One thousand feet, for instance, is approximately one standard city block.
Zoning departments differ in how they determine whether a location is sufficiently distant from schools, churches, or bars to be used as a taproom or tasting room. In some cases, a zoning department will take its own measurement. In other cases, the applicant must get a certification from the county property appraiser’s office (for a fee). For example, the City of Miami requires the applicant to provide a professionally sealed survey, which can cost several thousand dollars.
If the location doesn’t meet the local separation requirement, it might be possible to get a variance. A variance from the separation requirement generally works much like approval of a conditional use, and likewise requires payment of one or more fees. In other cases, the city ordinances do not allow a variance from the separation requirement.
3. How was this Location Used Before?
If the location was not used as a restaurant or retail establishment before, it is likely that additional impact fees must be paid before using the location as a taproom or tasting room.
Florida counties and some cities charge impact fees for the commercial use of buildings. Some uses–warehousing and light industrial, for example–carry a lower impact fee than other uses–restaurant or retail, for example. Different impact fees apply because the different uses create lesser or greater demand on local government services, like road maintenance, fire, and police. If a location that was previously used as a warehouse (low impact fee) will now be used as a brewery and taproom (higher impact fee), the difference between the impact fee already paid and the impact fee for the new use must be paid.
Impact fees are generally assessed on a per square footage basis. This makes it important to distinguish between the portion of a location that will be used for the manufacturing operation (low impact fee) and the portion of a location, if any, that will be used for the retail operation (high impact fee).
4. Is the Landlord on Board?
Unless you’re buying the location, it will come with a landlord. Even if everything else about the location is great, no location is better than its landlord.
You’re going to need your landlord’s support while you’re getting the location ready for business and after. Talk to the landlord and not just the broker or leasing agent. Make sure the landlord understand what you plan to do with the location. The landlord needs to understand the basics of operating a brewery, winery, or distillery, the regulatory requirements, and the cash flow picture.
Hopefully the landlord will love the idea of having a beverage manufacturer at the location. A landlord who wants a winery in his building, for instance, will go a much longer way to help you succeed. Free rent while you’re getting licensed, providing dollars for build-out, or paying the impact fees–these are all the ways a supportive landlord can help you get started.
Even if the landlord is indifferent to using the location as a beverage manufacturer, you’ll still need the landlord’s help from time to time. At the very least, the landlord must be willing to confirm to local government officials that you are allowed to use the location for beverage manufacturing and operation of a taproom or tasting room. After you’re up and running, dozens of issues may come up requiring you to go to the landlord for help.
5. Is the Lease Good for Beverage Manufacturing (and Can It be Made Better)?
After addressing Questions 1 – 4 above, carefully read and understand the proposed lease. Many commercial leases for a beverage manufacturer are badly written, because the writer didn’t understand beverage manufacturing. Even a good lease can be made better by negotiating terms that reflect your anticipated cash flow.
The first goal in reviewing a lease is to ensure it makes sense for the intended use. If you intend to use the location for a distillery and gift shop, for instance, does the lease clearly say that the location can be used for a distillery and gift shop?
Next, understand what the lease says about all your responsibilities, all the landlord’s responsibilities, and who foots the bills. Who pays for utilities, taxes, and property insurance? How much liability insurance are you required to carry? What happens if a payment is late? What happens if the building burns down? All the answer are in the lease–and if they aren’t, it’s a terrible lease.
Before signing any lease, ask for terms that will help launch your beverage business. Ask for free rent for the 3 to 5 months it will take you to get your licensing. You can’t make money during that time, so free rent will go a long way. Ask the landlord to pay the impact fees, if any. Those impact fees will have to be paid whatever higher use operation goes in the location, so it shouldn’t be pinned on you. Most importantly, ask for an early termination option in the event you cannot get licensed as a beverage manufacturer. The whole point is to start a beverage manufacturer; if you can’t do that, then you don’t want to be stuck paying rent for a location you can’t use.
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Contact BrewerLong (email@example.com) if you need help evaluating a location for your brewery, winery, or distillery. The success of your business is riding on getting the decision right. You cannot afford to make a mistake. If you sign a lease without working through these 5 questions, it might be too late or too hard to make it right.