Plans for the $300 million project to redevelop the Southside’s former Lone Star Brewery are on hold after one developer decided to break an agreement with its joint partner in the venture.
The decision comes after David Neuhoff, vice president of development at CBL & Associates Properties, Inc. of Chattanooga, Tenn., received an unsigned letter which accused Mark Smith, president of San Marcos-based Aqualand Development, of spending two years in prison. The letter, obtained by the San Antonio Express-News, also accuses Smith of having a record of suing former business partners.
“CBL has made a significant investment over the past two years in the development of the former Lone Star Brewery with the goal of transforming it into a vibrant, mixed-use project serving the entire San Antonio market,” CBL stated in a press release Wednesday.
“Unfortunately, due to circumstances beyond our control, we are suspending our pre-development efforts as we do not plan to pursue a joint venture with the current landowner or its affiliate Aqualand Development.”
The mixed-use development, which got a stamp of approval from the Zoning Commission and conceptual approval from the Historic and Design Review Commission, was set to break ground this summer, with plans to open Phase 1 in the fall of 2018.
“The City approved $5 million for street repairs and the [developers] talked to [the County] about building a parking garage,” Bexar County Judge Nelson Wolff told the Rivard Report Wednesday. “We put a lot of money into developing the river and this was a really big hope, so seeing this crash is really disappointing.”
Councilwoman Shirley Gonzales (D5), who represents the district, said she is “incredibly disappointed” about the dissolution of CBL and Aqualand’s partnership.
“Several of the 2017 municipal bond projects were in collaboration with that development in its anticipation,” Gonzales said. “… Around a $10 million investment total, from the City and TxDot [Texas Department of Transportation], to make Probandt Street and Lone Star Boulevard complete streets.
“These were much needed projects anyway, so hopefully with the public investment we are making it will encourage them to continue or find another partner to move along with the project,” she added. “There is enough traction on the Southside to make it a viable project.”
According to the Express-News, Smith was sentenced to federal prison for credit card and bank fraud in 1991 and was released in 1993. In addition, the IRS has filed several liens against Smith, and local company 210 Development – initially set to redevelop the brewery with Aqualand – sued the company in 2012 due to an unpaid loan worth $100,000.
Mark Tolley, partner with 210 Development, told the Rivard Report Wednesday he would not comment on the lawsuit.
“Whatever occurred between us and Mr. Smith is ancient history and water under the bridge,” Tolley said. “I think it’s more important for Mr. Smith to focus on getting another partner or selling the project to someone that can bring it to fruition.”
Last year, CBL executives learned that Aqualand had agreed to host the Mala Luna Music Festival at the site without their approval. Even though several neighborhood associations complained about the noise and Aqualand promised not to host the festival at the brewery again, CBL’s frustration increased when it learned that Smith had agreed to a three-year partnership with Mala Luna.
“This very public parting of ways is really unfortunate for that whole area and for everybody that’s worked so hard,” Tolley said. “This is a seminal project for the Southside that needs to occur, and it’s saddening that it’s not occurring. I certainly hope that CBL and Mr. Smith can work out their differences.”
Plans to rehabilitate the 35-acre site included a hotel, housing developments, a park connecting to the Mission Reach, a movie theater, and retail and office spaces. Many compared Lone Star to the Pearl and looked forward to the revamp in the area, which has seen unprecedented growth via restaurants, bars, and apartment buildings taking shape near the river.
“We thought this would become the pearl of the Southside and it would be a jumpstart for a lot of development in the area,” Wolff said. “We’ve gone through three or four developers coming in saying they would do it, but this time it was a really big disappointment because we thought it was really going to happen.”
The brewery was established in 1933 as Sabinas Brewing Company. It reopened in 1940 as Lone Star Brewing Company, but has been vacant for 20 years. The development teams planned to keep the brewery’s heritage alive by retaining its original color scheme and loading docks and preserving most of the existing brewery and cannery buildings.
“I can’t tell you I blame them if they had reservations about who they were doing business with,” Wolff said, reacting to CBL pulling out of the deal. “We’ll just have to wait and see if this thing re-emerges.”
While Aqualand Development is the property owner of the site, CBL still hopes there is a way it can develop the project in the future – but without Aqualand.
“We hope to develop the project without Aqualand Development’s involvement,” CBL stated. “We appreciate your interest in the Lone Star Brewery project and we will issue updates or announcements in the future as circumstances change allowing us to go forward with the project.”
