Nanobrewery is a no-go: School district opposes brewery location

Plans for a proposed brewery in the Franklin Arts Center will not proceed after Brainerd Public Schools issued its opposition to the brewery's location.

Jessica Bleichner and her husband Jesse were planning to open the Local Artisan Brewery in a 1,900-square-foot space in the west wing of the building this coming spring. They had applied for a conditional use permit from the city of Brainerd to operate the brewery. They were also in the process of amending the city's on-sale liquor zones map so the brewery could operate in the location.

An Oct. 19 planning commission meeting featured a public hearing on the brewery's conditional use permit application. An hour prior to the meeting, Steve Lund, director of business services for Brainerd Public Schools, sent an email to Mark Ostgarden, city planner. In the email, he outlined the school district's stance against the brewery's location.

"We have a zero tolerance policy regarding the presence of alcohol on school property and because of the exclusivity of our lease agreement with the auditorium/cafeteria and gymnasium spaces, there should be absolutely no alcohol present in these spaces," Lund wrote. "Beyond this, having the public availability of alcohol in such close proximity within the same building presents conditions that may promote alcohol purchase and/or consumption during school sponsored events, or events that are being held at spaces that are being supported by the school district."

The district became aware of the brewery's status about a month ago, Superintendent Laine Larson said. Lund brought it to her attention, she said, and they consulted the district's lease for the space. The brewery conflicts with the lease and the district's long-standing policy against drugs and alcohol on school grounds, she said.

"We want to always support new businesses and such that come to the community," Larson said. "But we just really feel that this is in violation of keeping alcohol and school property separate."

The district doesn't see how a compromise could be reached which would allow the brewery to operate in the Franklin Arts Center, Larson said.

"We just don't see how that would work when it's basically a school," Larson said. "It's a school facility."

Brainerd School Board member Reed Campbell said Lund mentioned the district's issue with the brewery's location in a conversation they had. When Lund issued a statement opposing the brewery's location, he was following the district's policy on alcohol and drugs in school facilities, Campbell said.

There was no discussion on if a compromise could be reached between the brewery and the school district, Campbell said, such as the brewery only operating when students aren't in the building.

"If they're going to be making beer and selling out of there, that's kind of a little conflict for us," Campbell said.

When told about the district's opposition to the brewery's location, board chair Tom Haglin said this was the first time he was hearing about the situation. Haglin saw an article in the Oct. 19 edition of the Brainerd Dispatch on the first reading of an ordinance to amend the city's liquor zone map for the brewery, but hasn't talked about the issue with district staff.

"I don't know why it would even come to us," Haglin said.

Board member Chris Robinson declined to comment when asked about the issue.

The school district's stance against the brewery's location served as an insurmountable obstacle, Jessica Bleichner said.

"If the arts center would have OK'd us to continue with our project, the school could have taken legal action," Bleichner said. "So that's ultimately what stopped everything."

Lease issues

The Planning Commission delayed a decision on the conditional use permit until the Bleichners could meet with the school district, Jessica Bleichner said. There was optimism a compromise could be reached, she said, but that was not the case. They met with Lund and Larson, who told them the district's stance wasn't going to change.

"They immediately said there's nothing we could say to change their mind or sway their position," Bleichner said. "They were absolutely zero tolerance towards the issue, they wouldn't hear me out on anything, there was no room for compromise."

The district's lease covers the auditorium, cafeteria area and gymnasiums, Lund reported, and also references common areas. The district reserves the gym space after school in case it is needed for practice space for Brainerd High School activities, he said. Soccer and softball teams will use the gym space if there is inclement weather during those seasons.

The BHS ninth-grade football team uses the school space and practices on the football fields at the Franklin Arts Center, which the school district still owns, Lund said via email. The district has historically scheduled open gym time and hosted family movie nights through Brainerd Community Education.

"The current lease is intended for the space to be used for student activities and events," Lund said via email. "Therefore, is a violation of the district's long-standing policy prohibiting the use of alcohol and controlled substances in any school location."

Mike Rengel, lawyer with Pemberton, Sorlie, Rufer & Kershner PLLP in Fergus Falls and the school district's legal counsel, said there's language in the district's lease prohibiting the sale of alcohol in the center. The lease prohibits a bar establishment or liquor store from operating in the center, he said.

Losing the Franklin Arts Center space puts the Bleichners "in a really big pickle," Jessica Bleichner said. They were able to possibly start their own brewery because of the low startup costs required for the space, she said. Other building options have much higher startup costs, due to the amount of work needed to get them up to code.

"Our theme, our name, our whole business plan revolved around that location," Bleichner said. "So anything else we do, we're back to square one."

The Franklin Arts Center is owned by Artspace Projects Inc., which purchased the building from Brainerd Public Schools in 2008 for $1.3 million. Greg Foley, asset manager with Artspace Projects, said the school district is about eight years into a 20-year lease. When asked for more details about the lease agreement, Foley declined to comment.

"They're a tenant and that's about the extent that I'm going to answer for that," Foley said.

If a tenant would like to sell alcohol as part of a special event, the tenant needs to abide by city ordinances, the lease agreement and city statutes, Foley said.

Planning process

The city had been working with the Bleichners on the Local Artisan Brewery since last spring, Ostgarden said. The city wanted to help a small business get started, he said, and the space in the Franklin Arts Center seemed like a nice fit for their artisan brewery. He felt bad the school district's alcohol policy wasn't caught earlier in the application process, he said, and because of it, the city would refund their application fee.

"That was kind of a surprise when we realized that," Ostgarden said. "We didn't really complete the process for them, so I think it's only fair they should be able to get their application fee refunded."

A clause in the Bleichners' lease allows them to opt out, as they weren't able to get their licensing approved by Dec. 31, Jessica Bleichner said. They had made minimal investments in the project, she said, and they'll be able to use the brewing equipment in their homebrewing operation.

One of the issues brought up at the Oct. 19 meeting was where brewery patrons would park. The city was going to suggest patrons use the nearly 100-space parking lot on the south side of the building across from Kingwood Street, Ostgarden said. Patrons could also have parked along North 10th Street near the west side of the building.

"I don't think their operation was going to be so large that it was going to create a significant parking problem," Ostgarden said.

Street parking is crowded when nearby St. Francis Catholic Church hosts events, or when the arts center hosts events, Bleichner said. According to the Oct. 19 meeting minutes, the Rev. Tony Wroblewski expressed concern about off-street parking availability, as well as the brewery's proximity to the church. However, the Local Artisan Brewery would have had a small occupancy and been unable to cause a parking problem, Bleichner said.

There had been widespread support in the arts center for the brewery, Jessica Bleichner said, so she assumed any issues tenants might have with the operation had been worked out. Still, she said she doesn't have any ill will toward anyone about how the process ended up, as she knew it was going to be difficult to open the brewery.

If the brewery were to be located in downtown Brainerd, the liquor zone map would not need to be amended, Ostgarden said. The brewery would still need to apply for a conditional use permit, he said, and there wouldn't have been a parking issue.