Last week, local and state economic developers announced that Sabra Dipping Co. would open a $59 million hummus plant in Chesterfield in 2010.
The deal required six months of work by state and local economic development groups and the right mix of incentives. But it was Sabra Dipping that made the first move.
Sabra requested proposals from the Virginia Economic Development Partnership in early March. At the time, the company wanted to find an existing facility that could be retrofitted.
Brent Sheffler, head of advance manufacturing at VEDP, soon assigned the project to Emily Stock. Within a week, Stock developed a list of possible buildings based on Sabra’s parameters. In April, the New York-based company came to Virginia to visit the potential locations.
“They just wanted a windshield tour of the facilities,” Sheffler said. Representatives looked at locations in Martinsville, Roanoke, Prince George and Alleghany County, Sheffler said.
Sabra says it plans to open the 110,000-square-foot plant in mid-2010 and employ 260. The Chesterfield Department of Economic Development says the plant will increase the county’s tax revenue by $3 million over the next 10 years.
Initially, none of the locations met the company’s needs. “If an ideal building did present itself, that would have accelerated their decision,” Sheffler said.
Chesterfield’s Ruffin Mill location did not come into the picture until June, after the company abandoned plans to redevelop an existing building. The company also looked at sites in Botetourt, Franklin, Augusta and Rockingham counties, as well as in Roanoke and Chesterfield.
Along the way, the VEDP team picked up clues that other states were courting the hummus maker. Sabra, which also makes other Mediterranean dips, was looking in New York and Pennsylvania.
One worry for Chesterfield was that some of the competing locations were closer to the company’s customers in the Northeast.
“All of a sudden, moving one more mile than they needed to became more of a factor in the assessment,” Sheffler said. Fuel prices were at an all-time high when Sabra was crunching the numbers.
State and local development offices spent months answering Sabra’s many questions, including where to get engineers, support service, conveyor belt repairs, plumbers and electricians. The company also requested more technical information, such as computer-generated boundary maps, workforce and quality of life statistics, and water pressure measurements. Two other economic development groups, Gateway Virginia and the Greater Richmond Partnership, provided support for the project.
“All these types of technical questions needed to be answered,” Sheffler said. “They are the type of things that showed the preparedness and responsiveness of the community.”
H. Garrett Hart III was the project manager for Chesterfield’s economic development office. “Most of the project over the six months we were working was answering questions they put together, making sure it was a good decision for the firm,” Hart said.
The growing hummus manufacturer is a joint venture between PepsiCo and the Strauss Group, an Israeli food and beverage company. Frito-Lay, PepsiCo’s food unit, assisted Sabra with the search for a new factory. PepsiCo’s relationship with VEDP put Virginia on Sabra’s list of places to search, said Stock, the project manager.
“[PepsiCo] located a [Gatorade] plant in Wytheville a few years ago and had a really good experience with our agency and the state of Virginia,” Stock said.
But competitive local and state incentives tipped the scale in Chesterfield’s favor.
“All companies need to make a business case as to why it makes sense to locate in one location or another,” Sheffler said. “Incentives can help swing the deal.”
Between June and September, officials knew the Ruffin Mill site was on Sabra’s short list, competing with locations outside the state and closer to the company’s distribution chain. During that period, state and county officials collaborated to put together an incentive package.
Gov. Tim Kaine authorized $350,000 from the Governor’s Opportunity Fund to help finance the project. As a condition, those funds had to be matched by Chesterfield. Because the Ruffin Mill site is located in a designated enterprise zone, the county was able to waive permit fees and offer a five-year rebate on the local machinery and tools tax, for a total grant of $398,000. Chesterfield also pledged an investment of $235,000 for sewer upgrades.
The state will provide job training for the facility through the Virginia Job Investment Program.
Chesterfield plans to collect $260,000 a year in real estate taxes, as well as $79,500 in machinery and tools taxes after the five-year rebate period has passed, Hart said.
“It was equally important for us to know what the company would provide in a three-year window as far as capital investment and employment,” Sheffler said.
More reading: S-A-T-I-R-E: “Sabra Hummus: Cedar’s Hummus Lacks Experience Necessary To Become America’s No. 1 Hummus” The Onion, April 2008