USA, IN: City of South Bend suing brewery that was set to open downtown
The city of South Bend is suing to pull the plug on a plan to develop a brewery near downtown, alleging that Bare Hands Brewery failed to follow through with its end of a redevelopment deal, the South Bend Tribune reported on May 15.
May 10, the city’s redevelopment commission approved a proposal to take back property at 331 W. Wayne St. that was originally sold to Bare Hands Brewery. The city filed a lawsuit that afternoon alleging the brewery breached its contract and demanded the property be turned over to the Department of Redevelopment.
Brewery owner Chris Gerard said he won’t lay down and let the city take the property.
“I want to fight tooth and nail to get justice for this,” Gerard told The Tribune on May 14.
In August 2016, the city sold the 9,000-square-foot building that was the former Gates Service Center to Gerard and his business partner James Priebe for $1. In order to receive the low sale price, the brewery committed $1.4 million over five years — $456,000 by the end of 2019 and another $979,000 by the end of 2021 — for building improvements.
The new brewery could potentially tap into a growing market near the construction of new housing developments by Four Winds Field and at the Hibberd building, along with the growth of new office space at the burgeoning Renaissance District inside former Studebaker factory buildings.
So far, Gerard said the company has invested thousands of dollars into the building, including HVAC work, utility payments, demolition and at least $4,000 in taxes.
According to the purchase agreement, Bare Hands had six months to apply for the appropriate zoning and land use approvals after the sale of the property, which closed on Feb. 24, 2017. The lawsuit argues the brewers did not “obtain or provided evidence of its good faith efforts to diligently pursue such zoning and land use approvals” after the city sent official letters three times in a four-month period and had “several informal notices,” as well.
“You had six months from the closing date on February 24, 2017 to obtain ‘all necessary approvals’ until August 2017 and have failed to do so,” said Barnes and Thornburg attorney Michael Knight, who is representing the city, to Gerard and Priebe. “Your failure to seek and obtain all necessary approvals has damaged the seller.”
However, the property was rezoned and given a brewery special exception on Dec. 6, 2016 — four months after the initial purchase agreement and two months before the closing had been approved. Gerard said he was at the meeting for the approval and thought everything was set. Gerard also said anytime the city contacted him, he responded.
Angela Smith, the deputy director of the Area Plan Commission staff, said that Gerard and Priebe were told that they needed additional variances for perimeter landscaping and changing their planned parking configuration.
“They haven’t submitted any new proposals since Dec. 6, (2016),” Smith said.
City spokesman Mark Bode released a short statement saying the city is pursuing legal action after “numerous attempts to work with the developer,” and declined further comment because of pending litigation.
Gerard said the city did not reach out to him until a letter demanding he cease construction was sent on Nov. 30, 2017. Before that time, the company held its annual Double Thai day at the downtown location.
“That was one of our best days of the year and it was on the property so (the city) had to approve all the permitting and fire inspection to hold the event,” Gerard said. “They had never mentioned any issues with me at that point.”
One contention point is the six-month deadline to achieve the appropriate zoning and building permits.
Gerard said he told the city that would be hard to achieve because it typically takes nine months for a brewery permit to be approved by the Alcohol and Tobacco Tax and Trade Bureau (TTB). However, according to TTB spokesman Tom Hogue, a permit takes an average of three months to be approved.
When he applied for the permit in May 2017, Gerard said he was told it would take nine months, but that he couldn’t apply for the appropriate city permits until the brewing permits were approved and that he made city officials aware of that.
“It took me nearly two years to get approval and open the doors on my first brewery,” Gerard wrote to the city. “Look at the other breweries opened recently in the area (i.e. Crooked Ewe and Heavenly Goat) and the time it took them to get their doors open...We did our best to make sure that the city was very aware of this.”
Bare Hands planned to relocate its production to the new Wayne Street location, but keep a taproom at the existing brewery in Granger.
“This is my living and the reason I do this is because I love it,” Gerard said. “Why would I ever want to delay that in South Bend? There is no fact or basis to what they are trying to do. ... It’s dirty. I had a lot of faith in South Bend and that’s why I wanted to come down there and now I’m starting to lose (that faith).”
14 May, 2018
