The Lone Star Brewery in San Antonio was supposed to be buzzing with construction workers and equipment by now — after sitting vacant for decades.
Instead, the 35-acre brewery is in foreclosure, scheduled to be sold on the steps of the Bexar County Courthouse next week. The grand $300 million revitalization project announced to much fanfare in August 2016 has been indefinitely shelved. The owner, Lone Star Brewery Development Inc., defaulted on a $7.4 million loan to NCC Financial, an affiliate of Houston real estate investment firm Crown Financial.
Representatives of Lone Star Brewery Development and NCC Financial declined to comment.
The foreclosure follows six months of turmoil for the brewery, after an anonymous letter shattered a partnership between national retail developer CBL & Associates Properties and San Marcos-based Aqualand Development to redevelop the site. The graffiti-ridden brewery, which was valued at $12.3 million this year by the Bexar Appraisal District, has been the subject of at least four failed revitalization projects since it churned out its last beer in 1996.
The latest failure is a blow for residents who hoped it would bring drastically needed jobs and retail to surrounding neighborhoods.
Developers proposed to use the land for a park, a boutique hotel, hundreds of apartments, 105,000 square feet of office space and 271,000 square feet of retail shops that included a Cinemark movie theater and a bowling alley. It would have been linked with the popular Mission Reach trail along the San Antonio River. Construction was supposed to begin a few months ago.
"Everyone in the community is eager for that to finally be developed. We've been wishing for that for many, many years," said Susan Powers, president of the Lone Star Neighborhood Association. "We get ups and downs and ups and downs."
The project sailed through most of the city's approval process as developers released flashy renderings, created a website and took neighborhood residents on walking tours to demonstrate their vision. The city and county both considered helping the project with incentives and infrastructure improvements.
The city still plans to spend $10 million for improvements to streets that run along the brewery's border, and the Texas Department of Transportation plans to invest another $8 million in the roads, District 5 City Councilwoman Shirley Gonzales said.
Residents of the area remain optimistic that someone else will step in to redevelop the brewery, Powers said.
"Eventually, I think someone will snatch this thing up and develop it," she said. "You see the Pearl, and I think this could be just as great."
South Side leaders also say they're optimistic about the brewery’s future, pointing out that other developers such as NRP Group and James Lifshutz have been investing in the area. NRP was under contract to buy 2.5 acres of the brewery for an apartment complex, and a representative said in August that the company planned to proceed despite the brewery’s troubles. The company didn't respond to a request for comment on Thursday.
"The momentum is there, the public investment is there, so we just need a private developer to come in and make things happen," Gonzales said.
The latest redevelopment effort faltered around June when CBL dropped out of its partnership with Aqualand after receiving an anonymous letter accusing Aqualand's president, Mark Smith, of having spent two years in federal prison and filing "nuisance" lawsuits against former business partners.
Smith and his companies have had repeated legal and financial problems over the years, according to lawsuits and federal filings. Lone Star Brewery Development Inc. — the subsidiary that Aqualand used to purchase the brewery in 2015 — defaulted on another $8 million mortgage loan from New Jersey investment company Princeton Capital Corp. in 2016.
Smith didn't respond to requests for comment.
In June, Houston investment company Parkview Capital Credit assumed control of Lone Star Brewery Development, according to federal securities filings. The company specializes in investing in "lower middle-market" companies, and its other assets include a $6.6 million stake in Ebony Media Holdings, the publisher of Ebony Magazine.
Keith W. Smith — who is CEO of Parkview, and is identified in state corporate filings as CEO of Lone Star Brewery Development — declined to comment.
Efforts to redevelop the brewery have been ongoing since at least the late 90s when SAWS considered putting its headquarters there before changing its mind over concerns about possible environmental contamination.
Around the beginning of this decade, local firm 210 Development Group partnered with Aqualand on the project. But the effort fell apart, and the firm ended up suing Aqualand twice for breaking a contract to redevelop the brewery and for failing to pay back a $250,000 "development fee" and a $100,000 loan. The companies eventually reached a settlement.
When CBL partnered with Aqualand last year, many local residents and leaders were confident that they would finally bring the brewery around. CBL brought experience with large-scale projects and access to capital.
"We’ve built projects that are a million-plus square feet," David Neuhoff, CBL’s vice president of development, told the Express-News last year. "We know how to manage that process and start it and finish it."
The next chapter for the brewery will begin on Tuesday at 10 a.m., on the steps of the Bexar County Courthouse. Local attorney Dale Weyand, the trustee for NCC Financial's loan to Lone Star Brewery Development, will then auction the brewery off to the highest bidder.
