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Pittsburgh water authority wants Iron City to pay debt
Saturday, June 13, 2009

You leave, you pay.

That's what the Pittsburgh Water and Sewer Authority is preparing to tell Iron City Brewing, which announced Thursday that it would shift most of the operations long housed in Lawrenceville to Latrobe.

The authority, which made concessions in 2007 that allowed the brewer to come out of bankruptcy, plans to seek repayment of $600,000 it believes it is owed.

"We'll ask them for it," said authority Executive Director Michael Kenney. "We will be sending them correspondence telling them that we don't feel that they are in compliance with the [bankruptcy] agreement, and then we will pursue whatever means we need to pursue."

He said the authority may consider invoking a lien on the brewer's Lawrenceville campus, though he would not say whether that would mean foreclosing on the property.

Iron City Brewing President Timothy Hickman said he'll wait to receive a letter from the authority before commenting on whether his firm owes $600,000.

"Any agreements that we have, we're going to honor them. We're fully aware there's a document and an agreement" with the authority, he said. "I would just like to see their calculations."

The brewer originally owed the authority $2.7 million for unpaid water and sewer bills.

The 2007 agreement reduced that to $1.5 million, of which $460,000 was repaid, $40,000 waived because of an early payment, and $400,000 forgiven under a clause related to improvements at the Lawrenceville plant, Mr. Kenney said.

Under the agreement, the $400,000 and potentially the remaining $600,000 were to be forgiven if the brewer replaced its boiler and its keg line, he said.

"Instead of replacing the boiler system, they revamped the boiler system," he said. "Instead of replacing the keg line, they revamped the keg line." That was deemed sufficient progress to warrant forgiveness of $400,000 in September, but not of the remaining $600,000.

"We don't think they've complied with the intent of that agreement since [September]," he said, adding that the pact obligated the brewer to continue making beer in Lawrenceville into 2010.

Mr. Kenney, who was not in his post when the agreement was inked, said a predecessor's decision to waive debt to keep the operation afloat was the right call.

"I don't think that [city and authority officials] were played," he said after an authority board meeting at which the brewer's move was not discussed. "I don't think that it was a bad decision at the time."

Rich Lord can be reached at rlord@post-gazette.com or 412-263-1542.
First published on June 13, 2009 at 12:00 am