USA, OK: City of McAlester awarded $1 mln grant for a brewery project

The Oklahoma Department of Commerce has awarded the city of McAlester a $1 million grant for a brewery project at the Steven Taylor Industrial Park, Mcalester News Capital reported on October 4.

City councillors are tentatively expected to vote whether to approve and accept the $1 million grant during the October 11 regular meeting of the McAlester City Council. Since city councillors previously voted to authorize the Department of Commerce grant application in August, it’s expected to pass if the measure comes before the council on October 11.

It’s the next step in a public/private partnership between the Krebs Brewing Company and the city of McAlester. The entire deal remained contingent upon the Department of Commerce approving the $1 million Community Development Block Grant-Economic Development Incentive Grant through the Oklahoma Department of Commerce.

“I think it’s a great project,” McAlester Community and Economic Development Director Leroy Alsup said on October 3. “It’s a great fit for our community and an example of how we can work with our existing business and industry to assist them with their expansion plans.”

Krebs Brewing Company President Zach Prichard also expressed enthusiasm over the grant’s approval.

“We’ve been working on it a long time,” Prichard said. “I’m happy to get it approved and get it moving forward and creating more jobs.”

The award-winning brewery, which has a national and international presence, currently has production facilities adjacent to Pete’s Place in Krebs. Agreements call for the brewing company to create at least 30 new jobs, over a three-year period, that pay an average of $41,000 annually, plus benefits.

Prichard said he also plans to start obtaining construction permits having to do with his construction plans for the existing building.

If the McAlester City Council votes to accept the grant as expected on October 11, the next step will be to get the property that’s part of the project appraised.

Reviews of documents and interviews conducted with city officials show how the project is designed to work.

Plans call for the city of McAlester to purchase the former QFI building at the industrial park. The property is owned by First Realty and Randy Saunier and includes a 52,000 square-foot building along with 17 acres of land, according to Alsup.

Asking price for the property is $1.1 million.

To reach the $1.1 million asking price, the city plans to add another $125,000 from city Economic Development funds — with $100,000 going toward the property’s purchase price and another $25,000 for the grant writer, Millie Vance.

The appraisal is a required part of the grant process. Alsup said if the appraisal for the property comes in higher than the $1.1 million asking price, then the city is expected to negotiate and is confident the property can still be bought for the $1.1 million.

Following the appraisal, the matter is expected to go before the council one more time, probably in November, according to Alsup.

The grant application called for matching funds that Prichard said the company needs to purchase new equipment.

To obtain the matching funds, the city of McAlester intends to put up collateral to help secure a loan to the brewing company. Plans call for the Krebs Brewing Company to apply for a loan through the First National Bank and Trust of McAlester, according to Alsup.

In August, a majority of the city council voted to put up $250,000 in city funds as collateral. The council authorized a $250,000 certificate of deposit from the city’s Fund 30 Economic Development Money to First National Bank and Trust in McAlester for a “business development loan” to Krebs Brewing Co. Inc. Plans call for the city’s $250,000 to be used as collateral for a larger loan from the bank to Krebs Brewing Company.

In addition, a companion measure in August called for city councillors to pass a resolution to commit $1,119,951 of leveraged funds to the CDBG-EDIF grant application to the Oklahoma Department of Commerce for the Krebs Brewing Co., Industrial Building/Property Acquisition Project.

Once all the grant and loan financing mechanisms are completed, the city plans to lease the building and property to Krebs Brewing Co. and not charge rent for the first 18 months, Alsup said. For the following 30 months, the city plans to charge rent of $5,000 per month, he said.

Then, for the next 20 years, the city plans to charge a nominal rental fee of $100 per month, said Alsup. At the end of that time, Krebs Brewery could pursue an option to purchase the property, again at a nominal fee, according to Alsup.

Those working on the project are pleased it continues to move forward. Prichard is anxious to get started at the new location. He already has a presence on the property at the industrial park, where he said raw materials are being kept. He said he’s awaiting the proper state and federal licensure that will allow for the production and storage of beer at the site.

“It’s been a good deal working with the city,” Prichard said.

06 October, 2016