Lone Star developers Midway, GrayStreet Partners seek $24M in city subsidies

The Texas-based developers of the Lone Star Brewery are seeking $24 million in subsidies from the City of San Antonio for the cost of infrastructure and other public upgrades in and around the long-abandoned site.

The $709 million project would resuscitate the former brewery, which has sat vacant 1½ miles south of downtown for 25 years, with a mix of apartments, hotel rooms, offices, restaurants, and public market and green spaces over the next 10 years on the upper banks of the Mission Reach segment of the San Antonio River.

To start, Midway of Houston and GrayStreet Partners of San Antonio are asking the city for $11.5 million for the project’s first phase—composed of 301 apartments, a 969-space parking garage, a 133,729-square-foot office building, nearly 6,000 square feet of retail and restaurant space, and more than 38,000 square feet of commercial space—which would begin in the fourth quarter of this year with demolition of some buildings at the Lone Star complex, and last through 2025.

In San Antonio, the $24 million is one of the largest public subsidy requests for an urban development project in recent memory.

The initial phase requires Midway and GrayStreet Partners to bring the site, which has become derelict and graffiti-covered since it stopped brewing beer in 1996, up to speed.

“The first phase is the biggest ask,” Don Quigley, Midway’s vice president of investments and development, told the council’s Economic and Workforce Development Committee on Tuesday. “That’s because we have the most work to do to get the site ready.”

The upgrades, which include demolition of some buildings on the 32-acre site, soil remediation, storm drainage work, burying CPS Energy overhead lines, and rebuilding Lone Star Boulevard, would be funded via reimbursement grants from city’s Inner City Tax Increment Reinvestment Zone as well as tax rebates.

“There are just a lot of hazards on the site today,” Quigley said. “What we need to do is selectively demo the buildings that don’t have any historical significance, no utility long term.”

On April 24, the brewery’s main building facing Lone Star Boulevard caught fire, immediately raising questions among Heron social media followers about how the incident might impact the project. Three previous attempts to redevelop Lone Star have failed, which the San Antonio Express-News chronicled in March. GrayStreet Partners purchased the property for $14.5 million last year, the Express-News reported.

Starting with a smaller first phase creates momentum for future phases, Quigley told council members. District 5 Councilwoman Shirley Gonzales, whose district encompasses Lone Star, agreed.

“My experience over the years is that when the developments have been smaller, they are more likely to succeed,” Gonzales said.

[ Download the Lone Star District Presentation given to the Economic and Workforce Development Committee on May 4, 2021. ]

Neither Quigley or Peter French, GrayStreet Partners’ development director, addressed the fire during the meeting; none of the five council members who sit on the committee asked about it.

“We remain committed to moving forward with our plan to redevelop the property,” French said in a statement the day after the fire.

During the meeting, District 3 Councilwoman Rebecca Viagran asked if the old teardrop-shaped pool, in which San Antonians congregated by the masses, would be restored.

“Practically speaking there will be no way for us to fill up the pool in the future,” Quigley said. They have no rights to pump water from the ground, as was the case back in the day, he said. The pool’s shape will be outlined in the ground in a park setting where visitors can also learn of its history.

“We have a lot of ideas on how we can do that, literally and creatively, with murals and displays and interactive elements to help tell people what happened there,” Quigley said.

Midway and GrayStreet Partners has committed to funding improvements to the Roosevelt Park pool on the other side of the river.

[ Related: “Pandemic derails GrayStreet Partner’s plans for Broadway East, delays W Hotel” ]

The Lone Star project is projected to create more than 10,000 jobs during the 10 years of construction, and 1,550 full-time jobs across retail, office and hotel segments after it’s built.

In all, the Midway and GrayStreet partnership is planning to build 1,282 apartments, 20% of which (or 256 units) were described to council members as being affordable, although the level of affordability was not articulated. City officials said the project will contribute $818,000 toward the city’s affordable housing fund over 10 years.

The $24 million incentive package for Lone Star is scheduled to go before the Inner City Tax Increment Reinvestment Zone board on Friday, and to the City Council on May 20.

Heron Editor Ben Olivo can be reached at 210-421-3932 | ben@saheron.com | @rbolivo on Twitter