Port City Brewing, a five-year-old Alexandria-based brewery, will receive $500,000 from the city and Virginia to help fund an expansion of its storage and production plant, creating 26 new jobs, Gov. Terry McAuliffe announced Wednesday.

Port City, one of 160 craft breweries in Virginia, will invest $2.68 million itself to lease a new warehouse near its existing headquarters, and will build a satellite storage facility, as well as upgrade its bottling capacity from about 300,000 cases per year, said Port City founder Bill Butcher. The company will buy 75 percent of its agricultural products from Virginia farmers, he said.

The $250,000 from the state comes from the Governor’s Agriculture and Forestry Industries Development Fund. The city will match it with local economic development funds, and expects to gain nearly $300,000 in new tax revenue over the next five years.