TUMWATER – Six years after the closure of the former Olympia Brewery, this once-vibrant economic engine has long since petered out and now has begun to decay.

The brewery has slowly been stripped of its parts. Olympia, Lacey and Tumwater have condemned its most valuable commodity – the water that gave the community some national recognition – and are a step closer to using it to serve their growing populations. What equipment the previous owner didn’t salvage to raise some quick cash has slowly been hauled away from the property for the same reason.

Some of the property has sold, but the primary holdings, including the historic brewhouse, sit idle. Security guards chase off anyone who lacks permission to visit the property.

“It’s just been really sad to see it go like it is,” said Gary Knittle, a longtime brewery employee who might as well have been talking about a dying family member.

He was one of about 400 employees who lost their jobs when the plant closed June 27, 2003. Since then, every time hope is raised for new life for the brewery, it has been dashed.

It’s a story etched in misfortune. A big corporation shuts down the century-old brewery, saying it’s no longer profitable. A start-up company, All American Bottled Water Corp., led by a chief executive with big dreams and virtually no business acumen, picks up the property for a song. That executive, L. Eric Whetstone, runs the business into the ground, leaving creditors on the hook for millions in unpaid bills after refinancing falls through and his criminal past as a scam artist is exposed in this newspaper. Creditors force the company and property into bankruptcy. A year of litigation and one unsuccessful offer for the property follow; then the lenders seize control of the property. They foreclose on it and put up a “For sale” sign.

And there it sits.

The property’s chief broker said that interest from prospective buyers has “picked up substantially,” and he noted recent conversations with three investors whom he declined to identify. He said a California-based investment group expressed interest in buying the entire property for mixed-use redevelopment. Another group of investors inquired about buying some of the property. And a local investor has renewed interest in the property.

But others have expressed interest before, and it didn’t lead to a formal offer and sale.

‘REMARKABLE CHALLENGE’

There’s no doubt the economy has dampened those prospects, stanching both the flow of capital and investors’ enthusiasm about launching a new business venture.

However, the property was up for sale at the tail end of the boom years. Ask some of the players in this continuing saga about challenges inherent to the property and they offer different answers. Some point fingers.

Troy Dana, the broker, noted the uniqueness of the property.

“When you have a building that has kind of been built and operated for one very specific use (brewing beer), it is a remarkable challenge to go out and find out cost-effective uses and utilities,” said Dana, senior vice president and managing director of the Olympia office of Colliers International.

Bankruptcy trustee Michael Hitt tried to sell the property for a year to repay creditors before losing it to foreclosure. He came the closest to succeeding, securing an offer from the family-owned Benaroya Co. of Seattle to buy the property for $45 million two years ago before the deal collapsed.

Challenges he cited in an e-mail were floodplain issues and the “local governments’ meddlesome restrictions on development.”

Specifically, he noted that officials would not allow a new owner to develop the property in accordance with existing zoning laws and “essentially dictating what uses they would find acceptable.”

Tumwater Mayor Ralph Osgood said at the time that a debate over the size of distribution centers was roiling the community. A month after the Benaroya deal fell through, he revealed that the company wanted to raze the old brewery buildings and build a distribution center of up to 750,000 square feet. He said he worried about the number of tractor-trailers that would clog roads not designed for heavy traffic.

“While we’re all anxious to get it redeveloped, it really needs to be redeveloped in a way that is conducive to the area,” Osgood said.

The city since has adopted an ordinance to regulate the size of distribution centers. Osgood said he would be open to a similar proposal for the property that complied with that ordinance.

Asked if he had similar concerns about city regulations, Dana replied, “They sent a very clear message to me, and that is they intend to be as cooperative and helpful and expeditious in the permitting process as they can be.”

FINDING THE RIGHT PRICE

Both Hitt and Osgood said the price sought by the property owner is hampering the sale. The old brewery property is divided into nine parcels, but the total asking price is unclear. The lenders who financed the sale of the brewery more than five years ago lent more than $30 million. Dana has pegged the total value at about $40 million. Miller Brewing Co. sold the property to All American Bottled Water Corp. for $14 million on April 1, 2004.

“To me, the price is grossly inflated, attempting to recoup the loss of the investors and not priced at the actual value of the property,” the mayor said.

Hitt said that the property owner, led by Barney Ng, should have worked with him before the downturn. When Hitt controlled the property, Ng was the chief representative of the lenders attempting to recoup their investment. The trustee has litigation pending against Ng and the lenders related to the purchase of the brewery.

“He may have not realized his full inflated debt amount, but he certainly would not be in the fix he is now,” he said.

Dana declined to comment specifically about the asking price or its justification.

“In Ng, I do not sense a mandate that there is a number out there and unless we get there, there’s nothing to discuss. I have not gotten that impression. I think there’s flexibility with him, yes,” he said.

Osgood said Tumwater officials have discussed condemning the property, possibly on the basis that it’s a blight. But he said the city simply could not afford the litigation and, if it succeeded, the compensation required to pay the property owner.

WHAT WAS, WHAT WILL BE

And so residents who live near or drive by the property are left to remember what was and ponder what will be.

One of them is Knittle, who worked more than three decades at the brewery as a mechanic, making $23 an hour. After the closure, he retired and lives pretty comfortably on the two pensions he earned there.

“It was the best place to work in Thurston County,” he said.

He recalled working with good people and on nice grounds. Workers used to tie ropes to the mowers to ensure that the grassy banks were maintained. The grass eventually was replaced with ivy that has grown over some of the property as time has passed, he said.

Knittle is convinced that, had the Miller Brewing Co. not prohibited brewing beer on the property when it sold the plant, brewing would have continued. And he’s still at a loss to explain why executives closed the plant.

“Maybe we didn’t make as much money as some breweries, but we were making money,” he said. “That was one of the things that was so hard when it was closed up.”

Six years later, it still leaves a bad taste in the mouths of the former employees once responsible for the taste enjoyed by so many others.

“I don’t buy Miller products,” Knittle said. “I don’t drink Miller products.”

Christian Hill: 360-754-5427
chill@theolympian.com