When Red Point Taphouse co-owners Tim Ryan, Derek Joyner and Nick Hess applied in 2020 for rezoning to open the brewery and restaurant in the circa-1929 former gas station on South Church Street, they reluctantly agreed, as a condition of approval, to pave the parking lot and connect to town water within two years.

According to Ryan, the town’s then-planning director, John Settle, told the partners at the time that their application wouldn’t be approved unless they agreed to the required upgrades, which three years after Red Point’s 2021 opening remain undone. Now they want out of the costly stipulation.

“We said, OK, well, maybe by 2022, we’ll have enough money to do this, not really understanding what it was going to cost,” Ryan told Smithfield’s Planning Commission on Aug. 13, stating he’d received a letter from Settle’s successor, Tammie Clary, in March estimating a cost of $31,000 to have town contractors extend the required 2-inch water connection to the business. Ryan said he’d received an additional quote of roughly $9,000 to pave the parking lot, which currently has loose asphalt millings.

According to Town Attorney Bill Riddick, the private well serving Red Point Taphouse and four neighboring houses predates the town’s annexation of the area. Clary said a water connection is needed to meter sewer use at the brewery, which she said is currently paying the minimum Hampton Roads Sanitation District fee. HRSD’s utility billing service bases its bimonthly sewer bills on metered water usage.

But Ryan said there’s a strong possibility that he and his partners would opt to close rather than take out a $40,000 personal loan to cover the expense. He said the Virginia Department of Transportation’s two-year rehabilitation of the Cypress Creek Bridge, which is restricted to one-way westbound traffic for the duration of the work, has already reduced revenue for 2024 by at least 15%.

“In a good restaurant … 10% profit margin is what you shoot for,” Ryan said. The other 90% of a restaurant’s revenue, he said, goes to labor, supplies and other operating costs.

Red Point brought in $609,000 in revenue last year and has paid out just under $100,000 in meals taxes to the town since 2021, Ryan said. An additional $40,000 expense, he said, would eat up the entire 10% profit margin on two-thirds of last year’s revenue. 

“We paid ourselves zero, so when you see us there on holidays, nights and weekends, we’re working for free so that we can get to the point where we’ve paid off all our debt and we can actually be profitable,” Ryan said. “Having a paved parking lot and hooking to town water doesn’t make us any more profitable.”

The Planning Commission, after debating the matter for nearly an hour, voted 5-1 to waive the paving requirement and to recommend another waiver through 2026 for the required water hookup, which would defer the issue for another two years. The matter will go to the Town Council in September for a final decision.

Commissioner Randy Pack, who also serves on the Town Council and owns Smithfield Station restaurant across Cypress Creek Bridge from Red Point, cast the dissenting vote, calling the required upgrades an “unnecessary burden.”

“I try to be small-business-friendly. … I think there always should be room for reasonable exception applied fairly and earnestly,” Pack said.

Planning Commission Chairwoman Julia Hillegass and Commissioners Charles Bryan, Thomas Pope, James Yoko and Virginia “GiGi” Smith each voted in favor of the motion by Bryan to still require, but delay, the mandatory water connection.

“They knew that they had certain parameters to meet; we’re asking them to meet them, and now they don’t want to meet them even though they knew this was part of the business plan prior to starting the business. So, that’s the devil’s advocate in this,” Pope said.

“My only analogy is … you can have a cookie before dinner, but you’ve got to do your homework,” Smith said. “This is kind of what y’all have been told, and now homework wasn’t done and you want another cookie.”

The town’s 2022 revisions to its comprehensive plan call for gradually converting the stretch of South Church Street east of Cypress Creek where Red Point is located to a more walkable, largely commercial district. To make that plan a reality, Pope contends it’s vital that the town hold everyone to the same standards.

“It’s not about putting them out of business, it’s not about making them spend more money, but we’re going to be looking at this issue as development continues,” Pope said. “We want commercial development. We don’t want housing developments. We need commercial and industrial and other types of development …, but when are we going to put our foot down to say you’ve got to come into full compliance with what the ordinances are?”