How the $206M yogurt plant deal was made

By ANDREA DECKERT - 4/6/2012

The roots of the deal that brought a $206 million yogurt-producing facility to Genesee County really were planted nearly a decade ago.
It was then that the Genesee County Economic Development Center and other local economic leaders decided to create shovel-ready sites for developers, said Steven Hyde, GCEDC president and CEO. That effort included securing some $8 million to help develop a site of more than 200 acres as the Genesee Valley Agri-Business Park in Batavia.
On Feb. 24, PepsiCo Inc., the world's second-largest snack and beverage company, and Theo Muller Gmbh, Germany's largest privately owned dairy business, announced they would open a joint venture in the county. The deal, worth more than $200 million, is to create 186 local jobs.
Originally dubbed Project Wave LLC, the joint venture is now Muller Quaker Dairy LLC. The 363,000-square-foot facility for producing Greek yogurt is slated to open in summer 2013.
"It was quite a process, and it started with a strategy we had eight or nine years ago to use the region's assets and work to enhance the ag community and make this a prime market for food processing," Hyde said.
Since having the site ready for development roughly a year ago, the county has landed three projects.
In addition to Muller Quaker Dairy, Alpina Foods LLC of Colombia, South America, is building a 40,000-square-foot yogurt-making facility on 10 acres in the Genesee Valley Agri-Business Park. The $15 million project, expected to create 50 jobs, is to open this summer.
The park also will be home to Marktec Products Inc., an industrial label-making equipment distributor, which plans to open a facility of roughly 5,000 square feet there this spring, moving its operation from leased space in Batavia.
The deal with PepsiCo and Muller is expected to help bring more food processors into the region, county officials have said.
It is the largest manufacturing deal for the county in more than 60 years, Hyde added.
"It was by far the most complex deal I've done in this role," he said.
The cooperation of state leaders, county and town representatives and neighboring agencies helped land the project, Hyde said.
When the request for proposals came out last summer, representatives from the Atlanta office of CB Richard Ellis Inc., who were in charge of site selection for the corporations, were looking at 16 sites throughout the Northeast. The Batavia site was on the B list.
The representatives made their first visit to Batavia last July. All was quiet after the visit until a phone call to Hyde's office late on a Friday afternoon in August brought news that an engineering group would return the following Monday morning.
Officials from the site selectors and companies did not respond to requests for comment about the selection process.
About that time, the site moved from the B list to the short list of four finalists.
The corporate decision was made after considering locations in New York and elsewhere. Those leading the effort for Pepsi and Muller considered various factors, including access to dairy resources, water supply and distribution routes to key markets.
A flurry of visits followed in early fall. Because of the size and scope of the firms involved, teams of people traveled to town. The groups included an international team, legal team and site selection team.
"It was quite a process," Hyde said.
Presentations and meetings continued through September, when Hyde said the local officials knew they were in competition with sites in Pennsylvania, which also had ample milk production capabilities.
Negotiations continued from November through February and were still being finalized up through the official state announcement. The negotiations included tax breaks and other state incentives, the land sale and site plan approvals. Some of the steps took time because they included public hearings.
In addition to Hyde, the negotiating team included Mark Masse, senior vice president of operations, and Chris Suozzi, vice president of business development, at GCEDC.
The biggest issue, officials said, was dealing with the various teams of people representing Muller and Pepsi. The local officials also spent a lot of time resolving questions related to the area's milk supply and infrastructure.
Officials from the joint venture said the milk supply and the ability to construct the facility quickly were advantages of the site. Hyde noted that the agency was able to help deliver a 30-month project in 18 months. That included obtaining site plan approvals from all parties involved in 15 days.
Being given limited access in November, before an agreement was finalized, allowed the companies to move 380,000 tons of dirt and saved 90 days on the project, Hyde added.
Hyde described the win as a collaborative effort. To entice developers, New York State, through the Empire State Development Corp., agreed to give the company $3.3 million in Excelsior Jobs Program tax credits, as well as $1 million from the state Homes & Community Renewal consortium and a $10 million state investment tax credit.
Genesee County is providing an estimated $12 million in sales and property tax savings.
Greater Rochester Enterprise Inc. also was instrumental in securing the deal, Hyde said.
Mark Peterson, president and CEO, said getting involved in drawing companies to the region is what GRE does, but he noted that the PepsiCo-Muller project was more challenging than others because of the scale of the companies involved.
The agency worked around the clock to answer questions and provide information on the sites the company was considering locally, added Matthew Hurlbutt, GRE's vice president and chief operating officer. That included the Batavia site and one in Avon, Livingston County.
"It was a nice win for the region," Peterson said.
The Genesee Valley Agri-Business Park has roughly 70 acres available, and Hyde said there is interest for three other projects. He declined to give specifics but said all involve food processing.
The county agency is working on another $2 million in infrastructure improvements for the PepsiCo-Muller site due to the size of the facility.
"We now have to develop the park faster than we originally planned," Hyde said. "But that's a good problem to have."

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