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Jim Dierberg's million-dollar makeover of Hermann

Rick Desloge

Jim Dierberg made his first investment in Hermann, Mo., when he acquired the town's bank in 1971. Three years later, he revived Hermannhof Winery, which had been out of business since Prohibition.

Now the 67-year-old banker is preparing to spend millions more on his most ambitious project to date, which he expects will remake the tiny Missouri River town, located about 80 miles west of St. Louis.

The centerpiece of his proposed multimillion-dollar redevelopment would be a living history farm showcasing Hermann's role in American wine making. The farm will be just east of his Hermannhof Winery, on 150 acres that Dierberg agreed to purchase for an estimated $1.5 million.

The living history farm is part of Dierberg's bigger vision to revitalize his adopted town. Parts of the plan already under construction include:

  • Converting a former MFA Inc. grain elevator and storage house into the Tin Mill Brewing Co. microbrewery and restaurant, an investment expected to cost several million dollars.
  • Rehabbing the second floor of his Festhalle banquet and meeting facility into 10 deluxe hotel suites, at an estimated cost of between $1 million and $2 million.
  • Moving seven historic "haus-wineries," home-based wine businesses, to a hill overlooking Hermannhof as part a proposed upscale inn.
  • Investing more than $500,000 to develop a "Gutenberg Corridor" arts and entertainment district, which would extend about five blocks through the city's historic district, and include the Tin Mill and Festhalle sites.

His motive, he said, is to help Hermann seize its economic potential. The city of 2,700 already is known for its collection of wineries and bed and breakfasts. Hermann also is the county seat of Gasconade County, and supports some light manufacturing and a small hospital. Dierberg said now is the time to turn the city up a notch.

"Hermann should be able to redo itself. Small towns in America are losing, mostly to big box stores," he said.

Dierberg knows the money side of business. He took over the family's First Banks operation when he was 29 and built it into one of the largest privately owned bank holding companies in the country -- one that generated a profit of $92.4 million last year. He and his family control the entire bank holding company, which includes $7.1 billion in assets and 170 offices spread across Missouri, California, Texas and Illinois.

He also knows wine. Hermannhof is still a small winery even in Missouri. It produces about 40,000 gallons a year, a fraction of Hermann's oldest operation, Stone Hill Winery, which produced about 200,000 gallons last year. Dierberg also owns the Dierberg Winery in Santa Ynez, Calif., which produces about 10,000 cases a year, roughly 23,700 gallons.

His plans have the backing of the Hermann community, which would like to see tourism increase beyond the 70,000 to 100,000 who visit mostly during the city's Maifest and Oktoberfest celebrations. At a recent public meeting where Dierberg presented his plans, he and other city officials received a standing ovation from the 400 or so in attendance. "I usually listen at those meetings for any kind of negative voice, and I didn't hear any," said City Administrator Steve Mueller.

Dierberg and his wife, Mary, fell in love with the town after visiting Hermann during its Maifest celebrations in the late 1960s and early 1970s. Dierberg said he remembers seeing the local bank during one of the weekend fests and called the owner the following Monday and asked if he would consider a sale. The two met later in the week and sealed the deal with a handshake, Dierberg said. He and his wife have been investing in Hermann ever since. They also own one of the historic homes in town, which they use on their frequent visits.

Living history

The 150 acres Dierberg is buying now once were home to George Husmann, based on information at the Gasconade County Historical Society Archives and Records Center. Husmann settled in Hermann in the mid-1800s and helped establish the area's wine industry. He led area growers who in the 1860s shipped

17 train car loads of phylloxera-resistant root stock to France. That saved vineyards in southern France after a phylloxera plague threatened to destroy the vines. Husmann later helped establish California's Napa Valley wine industry. Before Prohibition, Missouri was the No. 2 wine-producing state after New York.

"Gallo isn't as big to the wine industry as Hermann was prior to Prohibition," Dierberg said.

The acreage he's buying could be converted into as many as two model farms, with one showing Hermann's roots in the wine industry. Joy Kallmeyer, whose family owned the farms for nearly a century, said he expected renovation of 13 buildings on the farms to cost in the millions of dollars. He declined to discuss the sale price for the land. Dierberg also was mum on what he's paying for the property or how much he's prepared to invest in the operation, other than to say he hopes he's not paying too high a premium. Hermann-area real estate agents estimated the land alone could cost $1.5 million.

"I haven't a clue what it will cost," said Dierberg, who said he has been visiting living history farms in recent years to solidify his plans. "I'm hearing what some of these other ones are costing and wonder if I can afford it." Still, he said he is not looking for additional backing.

Similar living history projects have operating endowments ranging from $15 million to $70 million, and annual budgets ranging from about $1.5 to $2.5 million, according to a 2003 study from the state of Kentucky, which was considering establishing a living history site. Roughly 80 living history museums are in place across the country, according to the Association for Living History, Farm and Agricultural Museums.

Dierberg balked at comparing his plan to any other living history farm. "What I learned in my visits is they all do their own thing," he said, adding that his plan would help preserve Hermann's distinct culture stemming from the German settlers who arrived in 1837 and built the area into one of the largest wine-producing regions.

"This is a special piece of dirt," one that deserves to be saved as green space, Dierberg said.

Remaking a town

In addition to his winery, vineyards, and control of First Bank in Hermann, Dierberg is backing his daughter and son-in-law, Ellen and Steve Schepman, who are converting the former MFA grain elevator into Tin Mill, a microbrewery and pub that plans to distribute its beer when it opens a year from now. Tin Mill will include underground pipes to transfer beer from the grain elevator site along Hermann's riverfront to a nearby lager house with a bottling line. Similar brew-pub construction projects in the St. Louis area have cost between $1.5 million and $2 million, though costs in Hermann likely are lower because labor costs are less.

Don Gosen Jr., the brewmaster and Schepmans' partner on the project, estimated the brewing equipment, including a planned bottling line, could cost $500,000.

Dierberg also is rehabbing the second floor of his Festhalle, a meeting and banquet facility designed after a Munich beer house, to include 10 luxury suites, each with about 900 square feet. Festhalle, across the street from the Tin Mill site, reopened 15 years ago.

On the hillside above Hermannhof, Dierberg is reconstructing seven historic, 900-square-foot haus-wineries, combination homes and wineries that date from the community's founding. Those buildings, and the rooms above Festhalle, will include hot tubs, fireplaces and other luxury amenities when they open in October. Those two projects are expected to cost between $2.5 million and $5 million, based on estimates from people familiar with construction in Hermann.

Dierberg's plans inspired Terry Hammer, co-owner of the Hermann Ford-Mercury dealership, to expand his existing, eight-unit bed and breakfast business with a new, 16-unit Hermann Village Hotel, Spa & Conference Center on 15 acres fronting the Missouri iver, directly across Highway 100 from the proposed living history farm. Hammer's project is under construction, with each unit including hot tubs. Some could be ready this fall, with prices likely to match those at his current establishment -- $150 to $245 a night. He's leaving room on the site for a small, chain-style hotel.

"None of this would be happening if it wasn't for Jim and Mary Dierberg," Hammer said. "Every town wants their money, and they've chosen to develop here."

What kicked the projects into gear was the MFA Inc. farm cooperative deciding it needed a more modern grain elevator. That would have left a hole in downtown Hermann. Dierberg stepped up and purchased 10 acres Hermann officials put up for sale on the edge of town. He then swapped that property with MFA for its downtown grain elevator, now the site of Tin Mill.

His downtown Hermann properties are in a "Gutenberg Corridor," an arts and entertainment district Hermann is developing, with help from Dierberg and local benefactors.

Earlier this year Dierberg gave $91,000 to East Central College in nearby Union, Mo., to help develop ideas to market Hermann's Gutenberg Corridor, which should be operating within a year. He also pledged $85,000 toward a new Amtrak station in Hermann to replace an existing whistle-stop building.

Dierberg said the plan is to attract more crafts people and artists to move to Hermann to help support what he hopes will be an expanding tourism and visitor business.

rdesloge@bizjournals.com



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