Monday, August 1, 2011

Smuttynose Builds its Dream House - Part 5 - Newmarket Mills (b)

Good afternoon.  As you can see, it has been a long, long time - way too long -  since the last time I posted on this site. Before I look back to 2005, when our plans for building a new Smuttynose brewery in Newmarket finally came to an end, I'd like to provide a brief update on where things stand at present.

As of this writing, Monday, August 1, 2011, our plan to build our new brewery in Hampton is very much alive and moving forward, though not as quickly as we had hoped or originally planned. We own the property at Towle Farm and have sought and received Site Plan Approval from the town. The project is fully designed and engineered.  It is, as they say, shovel-ready.

As some of you have heard me say, if I bought a winning Powerball ticket on my way home from work today, we would begin construction next week.  In reality, we are putting the final touches on a very complex and multi-faceted financing package which will consist of a sizable amount of owner equity, bank loan(s), SBA financing, and a variety of smaller loans acquired through various public agencies. If all the pieces fall into place as we expect, we will apply for a building permit before the end of this month and start building in the fall. If we stick to that schedule, we will move into our new brewery at the end of 2012 or beginning of 2013.

Now, back to Newmarket...
On October, 27, 2005, I sent a letter to the Newmarket Community Development Corporation and Town Council. It was addressed as an Open Letter, so it was no surprise that it quickly passed through a lot of hands, including those of our local newspaper.  Here is what my letter said:


I had written a different version of this letter last week and was preparing to send it out when an acquaintance brought to my attention an article that appeared in Foster's Daily Democrat on Tuesday, October 18. Whether intentionally or not, the article grossly misrepresented my position with respect to the redevelopment of the mills in Newmarket. In light of this, I have rewritten my letter in order to clarify that position and to explain why I have finally thrown up my hands in frustration and walked away from what looked like such a promising venture.

In simplest of terms, the Newmarket Community Development Corporation was not able to successfully conclude its negotiation with me because of its naive and excessive demands on one hand, and its failure to mitigate the risks in a project of this magnitude by properly addressing the uncertainties surrounding downtown Newmarket on the other. In fairness to the NCDC, the latter point comes as the result of poor overall planning in Newmarket, which in turn is the direct result of the town's weak, fragmented leadership.

As you know, well over two years ago I began negotiations with the NCDC with the goal of creating a new home for my company in Newmarket's riverfront mills. I had envisioned that these buildings and the land surrounding them would evolve from their present state of shabby, urban blight to a vibrant centerpiece of community life in Newmarket, and I was proud to have the opportunity to play a key role in that. That vision included the relocation to Newmarket of our award-winning artisanal brewery, a visitors' center, pub and restaurant, as well as other uses, including arts-related activities, offices, and even some residential occupancy. I had hoped to have the opportunity to develop the land surrounding the mill buildings, especially the central millyard, in a way that would enable it to become a "village common," a place of public gathering and activity. What made my plan different from most developers is that I was intending to set down roots, to tie my company's future to Newmarket's, and I was very optimistic about that, so optimistic that I devoted two years of hard work, hundreds of hours of my time, and well over a hundred thousand dollars in pursuit of that goal.

This past August, I suspended my negotiations with the NCDC, and I have since decided to drop them altogether and pursue opportunities elsewhere. There are two basic reasons why this occurred. First, it became clear to me that the risks associated with this project far outweighed the potential benefits. And while risk assessment is something that anyone in business routinely does, what makes this situation so frustrating is that the risks that finally drove me away from Newmarket had little to do with business considerations at all, but instead were the direct result of uncertainties arising from the fragmented, dysfunctional process of decision making and planning that I encountered there. Furthermore, it was evident that the NCDC was attempting to saddle this project with well-meaning but wildly unrealistic restrictions and stipulations that made the project a non-starter from a financial standpoint.

When I first began negotiations with the NCDC I was told that I could only purchase the riverfront mills and the land on which they sat - nothing more. The fate of the property surrounding these buildings was uncertain, because the future development of the Main Street mills and the Riverwalk was yet to be determined. That, unfortunately, was simply the first on a long list of yet-to-be-determined items. Parking? Uncertain. Pedestrian and automobile access to my businesses? Uncertain. My hopes to create public space in the millyard? Contingent on unknown factors. Riverwalk? Uncertain. Main Street development? Up in the air. TIF funds? Someone else's department. Water & sewer? Unclear. In effect, I was being asked to take a huge leap of faith, investing between eight and ten million dollars into what would be a tiny island of clarity surrounded by a sea of uncertainty. One thing I did find certain is that the major stakeholders and decision makers do not communicate effectively and often are completely unaware of what the others are doing. Resources that the town possesses or has access to - like its very capable and talented Town Planner - are largely underutilized, important decisions are made in a vacuum, often in a veil of secrecy, while the town administrator's office is largely ineffective. Meanwhile, the town's architectural and cultural centerpiece, the heart and soul of Newmarket - its mills - steadily, quietly deteriorate.

Newmarket is a community with an abundance of good ideas and laudable ambitions. However, good ideas and ambition are no substitute for sound planning. In the time I spent working on this project, I encountered many bright, energetic, creative people with high hopes and aspirations for their community. I was witness to much discussion, and lots of different visions, but little in the way of leadership helping to bring it all together into a unifying vision, and certainly no attempt to craft a real plan which all the stakeholders have a part in shaping, and which guides future growth and development.

The Foster's article made it appear as if I did not want to be the developer for this project, as if I suddenly came to my senses and realized I was in over my head. Nothing could be further from the truth. I was ready, willing and able to tackle the development of the mills, to work with the Town of Newmarket bringing my vision to fruition. What I am not prepared to do is risk everything I have built over nearly twenty years in such a problematic environment.

Your town has a great amount of potential and human capital. This is a time of tremendous opportunity for your community, but I believe that opportunity will never be fully realized without a change in the fragmented, piecemeal decision making process and lack of leadership that I have encountered there. And although I believe the Town and the NCDC are taking a small step forward in putting out a request for proposals for all of the mills packaged together, this is not sufficient. Why is Main Street Phase II even moving forward without a commitment to develop the mills? And why are either being discussed without a comprehensive plan for parking? And who is leading this process? Before another step is taken (and someone else's time and money are wasted), Newmarket must take a step back and look at its big picture. It needs to bring in outside expertise that can assist in bringing stakeholders together, facilitate the process of translating all those good ideas floating around into a plan, building a consensus to support that plan, and advocating on behalf of the community as that plan is put into action. If Newmarket tries to do this on its own or on the cheap, the results will be disappointing at best, disastrous at worst. That is my parting piece of advice.

As you can probably tell, I am very disappointed in the way things have turned out. According to our original timeline, we would have been wrapping up the planing and permitting process by this time, with the goal of breaking ground in early 2006 and being open for business by the end of the year. I am not the only one that is disappointed. We still get emails almost every day from people telling us how much they look forward to the day we open our doors in Newmarket.

Peter R. Egelston
President, Smuttynose Brewing Company


Rereading this letter today, I am not especially proud of its angry, self-righteous tone. However, I still believe that my description of the situation was accurate, so I won't elaborate further here - the letter speaks for itself.  Since then, I believe that the climate in Newmarket improved considerably with the departure of the Town Administrator who was present at that time, and I was happy to see a recent report that Newmarket's mills will finally be brought back to life, as described in this Portsmouth Herald article.

Once the decision to walk away from Newmarket was made, we were back at Square One, as far as building a new facility was concerned.  That fall, as soon as the news became public that we were done in Newmarket, we heard from people in Dover, Exeter, Newfields, Stratham and Epping, suggesting that we consider locating our brewery in one of their communities.  But the one place I wanted to take a fresh look at over all others was our home town of Portsmouth.

One of the reasons we did not seriously consider Portsmouth in the first place was its strict use-based zoning. Our plans always included a brewery with a visitors' center and restaurant. In Portsmouth, a light manufacturing use such as a craft brewery is not permitted in a commercial zone, where a restaurant would be permitted; a restaurant would not be permitted in the industrial zone. However, the city had just adopted a new Master Plan, which encouraged the concept of mixed uses and even suggested zoning changes to encourage mixed-use development. I felt that this might be a good opportunity, so shortly after I cut my ties with Newmarket, I reached out to Nancy Carmer and John Bohenko, Portsmouth's Economic Development Program Manager and City Manager, to discuss the possibility of Smuttynose building a new brewery close to home.

While this was going on, sales at Smuttynose continued to increase, and our need to build a new brewery became more urgent. We got a temporary reprieve in early 2006, when our neighboring tenant moved out, giving us the opportunity to take over the entire building and increase our floor space from 12.5 to 25 thousand square feet.  In April, 2006, we installed our first 200-barrel fermenter. Since our building has 15 feet of clearance from floor to rafters, and tanks that size are 23 feet  high, we set the tank outside and constructed an addition on to the building to accommodate it. (This was the first of five such tanks we'd add over the following four years, with four more still to be added at the end of this year.)

Around the same time, our attention was drawn to a vacant 10-acre parcel of land on LaFayette Road (US Route One) in Portsmouth, about a mile from our current location.  In many ways it was an ideal site for our new brewery.  The property was zoned Office-Research, a hybrid zone identified as problematic by the City's master plan, and city officials assured me that since this site was targeted to be rezoned, my timing was very good. I purchased an option on the property and then embarked on a long, strange trip and expensive civics lesson.

Next time: how a plucky little band of neighbors united to slay an menacing, evil dragon (us) - or the existentially angry denizens of Elwyn Park versus Smuttynose Brewing Company.


  1. It's a shame the town couldn't work you guys in. The mills are being developed finally, and it does look nice down there. However I would much rather have had a brewery in town that could provide not only jobs, but a reason for people outside of Newmarket to come to the town. There are going to be a few new shops there but also more apartments. Newmarket already has plenty of housing, what it doesn't have are jobs, especially for soon to be graduates with degrees in chemical engineering who would love to be in charge of 200 barrel fermenters, whether its for brewing beer or for manufacturing drugs for Genzyme down in Boston.

  2. Peter, great to hear the Hampton site is progressing. Having just completed a new home in Hampton Falls and moved out of Portsmouth after 13 years (also due to neighborhood interference issues), it will be a convenient 3.1 miles form my new front door...can't wait.

    Craig Annis
    Vanguard Key Clubs