Taxpayer Funded New York Distillery

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Clayton Distilling Company Receives Federal Grant
USDA Tag.jpeg
AgencyUnited States Department of Agriculture (USDA)
Amount of Spending$99,000 Rural Business Enterprise Grant to open new facility
Websitehttp://usda.gov/
Additional IssuesClayton company planned to purchase an addition $312,000 worth of equipment

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On March 31, 2012, the Watertown Daily Times released a story reporting the Clayton Distilling Company had received a $99,000 Rural Business Enterprise grant from the United States Department of Agriculture (USDA) to expand the company. The grant was intended to purchase equipment for a new 2,560-square-foot facility at 40164 Route 12 in New York.

The project was scrutinized by owners of competing distilleries and by members of Congress and made an appearance in Sen. Tom Coburn's (R-Okla.) 2012 Wastebook.[1][2][3]

Contents

Clayton Distilling Company

The Clayton Distilling Company is co-owned and operated by Michael L. Aubertine and was supported by the Jefferson County Industrial Development Agency (JCIDA). Aubertine originally applied for the USDA grant in early March, and was selected to receive funding for the project because it was the first operation of its kind to open in the area. Aubertine approached JCIDA in early March as well to ask for assistance. With the funds awarded through the Rural Business Enterprise Grant program, the JCIDA purchased a copper still system and stainless steel vodka column. At the time, the plans were to have it installed by the fall of 2012. The Clayton company also planned to purchase an additional $312,000 worth of equipment through the JCIDA and to pay back without any interest in five to seven years.

The distillery opened on April 1, 2013. Vodka production began in mid-February and several 1,000 pound batches of mashed corn were fermenting in stills. To continue the process, the alcohol was then sent through a 250-gallon copper pot to prepare for bottling. According to Aubertine, the distillery was supposed to look like an old barn and reminded Aubertine of his family's old farm in Cape Vincent. The first attraction customers see is a giant copper pot still and then the store where customers will be able to purchase six-bottle cases starting at $28.99 as well as T-shirts, hats and mugs. Aubertine planned on selling 10,000 bottles during the first year.[4][5]

Public Response

The Clayton Distillery was met with some opposition. Roger Reifensnyder, a developing consultant from Hammond who owned 85 acres of farmland in a nearby town, also planned to open a similar distillery in the area. Reifensnyder said the federal funds awarded to the Clayton Distillery would allow Clayton to sell cheaper alcohol in a smaller market. He noted that his company could not afford these prices because they had not received a grant and argued Clayton should have paid a fair market value for the equipment they obtained. Reifensnyder also claimed they had a unique idea being that his distillery would sell a range of unusual vodka products as well as cheese from local dairy farms.

JCIDA Deputy CEO David Zembiec responded to these claims saying, “We don’t apply for funding for a project unless a business comes to us with a plan. We’re always asking businesses about what products they have in mind, but they’re not always familiar with all of the funding programs out there.”[6]

Congressional Response

On October 9, 2012, Clayton Distillery appeared in Sen. Tom Coburn's (R-Okla.) 2012 Wastebook. The senator mentioned that Americans bought almost $20 billion in liquor last year, up four percent from the previous year. In the book, Sen. Coburn congratulated Reifensnyder for not requesting public funding and for doing everything on their own. Sen. Coburn said, "Taxpayer funds should not be used to advantage one company over another, nor should they be used to subsidize an industry that already enjoys wide market appeal."[7]

Additional Reading

References

  1. Watertown Daily Times. Developer says grant-funded Clayton business jeopardizes distillery plans. May 31, 2012.
  2. Watertown Daily Times. Clayton Distillery will try to put customers in high spirits. March 8, 2013.
  3. Senator Tom Coburn (R-OK). 2012 Wastebook. October 9, 2012.
  4. Watertown Daily Times. Developer says grant-funded Clayton business jeopardizes distillery plans. May 31, 2012.
  5. Watertown Daily Times. Clayton Distillery will try to put customers in high spirits. March 8, 2013.
  6. Watertown Daily Times. Clayton Distillery will try to put customers in high spirits. March 8, 2013.
  7. Senator Tom Coburn (R-OK). 2012 Wastebook. October 9, 2012.