News Column

Ruckus set to close on Neuweiler brewery property

February 25, 2014

By Scott Kraus, The Morning Call (Allentown, Pa.)



Feb. 25--It has taken them a full year, but Ruckus Marketing has raised the cash it needs to close on its purchase of Allentown's historic Neuweiler brewery.

The New York-based marketing firm, which owns Ruckus Brewing and wants to rehab the North Front Street brewery so it can brew its beer and other beers there under contract, has secured financing from unidentified private investors to close on the property as early as Friday.

"It is a step ahead we have to take. The town has been very supportive," Ruckus CEO Josh Wood said.

The Allentown Commercial Industrial Development Authority agreed Tuesday to give Ruckus up to three years from closing to complete at least $3 million in improvements before a "reverter" clause kicks in, allowing the authority to buy the property back for a fraction of the $1.7 million sale price.

Ruckus' actual construction schedule is far more aggressive. The company hopes to start work as soon as late summer and to open the brewery by the end of the year or in 2015, Wood said.

"We are doing everything we can to get started," he said.

Ruckus won the right to redevelop the landmark brewery a year ago, but had been unable to produce the financing needed to close the deal after signing agreement of sale last April. It received three extensions.

Wood said the company looked into a variety of financing sources, including promoting the project on an Internet crowdsourcing website and getting buy-in from the Philadelphia-based nonprofit The Reinvestment Fund, but in the end, settled on an investment from unnamed business contacts.

Ruckus will bring $1.1 million in cash to the settlement table and will pay the rest of the purchase price in installments. The first chunk of money will go primarily to repay BDH Development, owned by Lehigh Valley Phantoms' owners Rob and Jim Brooks.

An affiliate of BDH secured a related property as the site for a hockey arena before the city settled on its current location at Seventh and Hamilton streets.

The balance of the purchase price will be used to repay the city for money it advanced as part of a revolving loan fund to cover cleanup costs at the brewery.

Ruckus' next task will be to raise the financing needed to complete construction of the multi-phase $30 million project.

Wood said he and his partners hope to secure project approval through the Allentown Neighborhood Improvement Zone Development Authority, allowing them to offset construction loan payments with future state and local taxes, not including property tax, generated at the site.

The Neuweiler project, called Brewers Hill, would convert the long-vacant brick structure into a working brewery that would crank out Ruckus' line of microbrews and sell additional brewing capacity to other beer-makers. It also would include office space, a business incubator and a brew pub.

The brewery opened in 1913 at Front and Gordon streets and closed in 1968, a casualty of competition from large corporate breweries.

Wood had said the company had planned to open this year and by 2020, employ about 50 people at an average annual wage of $50,000. The company says converting other buildings in the complex to house retail, commercial and light-industrial tenants could mean 115 additional jobs.

The property has frustrated city officials' redevelopment efforts for years. Its location in one of the city's poorest neighborhoods and the site's need for environmental cleanup have been significant obstacles.

Scott.kraus@mcall.com

610-820-6745

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Source: Morning Call (Allentown, PA)


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