South Bend moves to take back property from local brewer
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After seven years of deadline extensions, the city of South Bend wants to move on from a partnership with local brewer Bare Hands Brewery.
The city first entered into an agreement with Bare Hands in August 2016, selling the Granger-based brewing company an empty car dealership service center about a block north of Four Winds Field for $1.
In return, Bare Hands agreed to invest more than $1 million in transforming the former Gates Automotive center into a downtown South Bend taproom within 60 months. However, after years of stalled work, renegotiated deadlines and one lawsuit already, city officials are ready now to cut ties and explore new partners in a part of the city poised for new growth.
South Bend’s redevelopment commission voted unanimously this week to issue a letter of default on the property in an effort to take back the land at 331 W. Wayne St. and court other development opportunities.
“This is simply about the commitments made to the commission and seeking to make sure that those are met,” said Caleb Bauer, South Bend’s executive director of community investment. “I think everybody’s excited about what Bare Hands was proposing here but after seven years, if we’re not seeing that come to fruition, and there’s not a path to it coming to fruition, I think it’s appropriate for the redevelopment commission to consider other opportunities for this site.”
Caleb Bauer speaks to reporters about why the city is pursuing a letter of default.
City officials say they invited brewery owner Chris Gerard to attend their meeting Thursday morning but the owner told them he was unable to attend and instead shared some financial information in an email.
The city’s building department did an inspection in February and found some required electrical and plumbing work had been done. However, city officials say, little has been done since then.
The city tried once before in 2018 to take back the property in 2018 after they say the brewery failed to meet its initial deadlines. A following lawsuit was resolved giving Bare Hands extensions to complete work which then ran into delays in 2020 during the pandemic.
In total, the city’s agreement with the brewery has been amended seven times since its initial signing. The city’s most recent extension granted Bare Hands until Sept. 1 to complete work.
Bauer said Bare Hands’ owners told the city just days before, on Aug. 29, that the brewery didn’t have financial means to finish the project.
“They said they have faced challenges on the financing side, that there have been changes in business partners and that financing has fallen through or not been able to be solidified in the timeframe,” Bauer told reporters Thursday. “That was news to us. As part of the sixth amendment to the development agreement, we were led to believe that there was financing in place for the project.”
City officials say their decision also comes as Bare Hands allows taxes to stack up. The brewery owes nearly $7,000 in delinquent taxes and made its last payment about six months ago, Bauer said.
Inside Indiana Business left multiple messages for Gerard at Bare Hands’ Granger taproom. None were returned.
Redevelopment Commission Secretary Vivian Sallie said Thursday she was disappointed no one from the brewery appeared to make their case.
“I’m very concerned that the owner did not feel the need to come to our meeting today to at least give us their side of the story,” Sallie said. “I think it was very disrespectful that they didn’t show up today.”
With the commission’s approval, Bauer said the city would be working Thursday to draft the letter of default and sending it out “as soon as we can.”
If after 30 days Bare Hands doesn’t make substantial movement toward completion, the brewery’s agreement with the city states the owners should return the automotive service center deed back to the redevelopment commission. Bauer expressed little confidence Bare Hands could finish the project in 30 days, saying those efforts would be a scramble at the last minute.
“I would hope that the property owner would abide by that term of the agreement, which is very clearly laid out,” Bauer said. “Obviously if the property owner were to choose not to convey that deed, there could be litigation.”
Bauer speaks on expectations and the city’s goals for working with private developers.
The property has likely only increased in value over the years, city officials say, as transformational new projects like a multi-million dollar expansion of Four Winds Field expansion and multiple new apartment complexes, have been announced in the area.
Bauer said the city has been approached by developers interested in the property over the years but has declined discussions in order to keep good faith with their agreement with Bare Hands.
Now, Bauer said, may be time to consider other uses for the former Gates Automotive service center.
“Is there a higher and better use for the entire block than an adaptive reuse of the Gates building?” Bauer said. “It could be new construction.”
This marks the second time this year the city has chosen to take action against property owners who officials say have failed to deliver on their promises. In January, the city sued local developer David Matthews of Matthews LLC for missing deadlines on an agreed upon grocery store and pharmacy to anchor retail space in a high-rise apartment complex in the city’s East Bank neighborhood.
That project was also marred by pandemic-driven delays, Matthews told local media at the time. However, like with Bare Hands, that project was also granted extensions, city officials say.
“It’s 2023 and though there are still some challenges in the economy, certainly on the supply chain-side and inflation, we’ve also seen a lot of projects move forward,” Bauer said. “That’s an indication that we have movement in the economy and new construction occurring and so we can’t always be referring to the pandemic as the reason why a project isn’t moving forward.”