City Council To Weigh 5 Month Delay To Buy Land
Start-up firm CaliCheese Co says they are steps closer to building a new 300,000 sq ft cheese plant on land owned by the City of Tulare but need more time to complete all financing arraignments.“We will be making a request at the January 21 Tulare City Council meeting asking for an extension of time” to buy 60 acres from the city where they will build the plant. As it is, the company was supposed to have completed the purchase of the site by January 15, 2014.The new date would be June 30, 2014.
Start-up firm CaliCheese Co says they are steps closer to building a new 300,000 sq ft cheese plant on land owned by the City of Tulare but need more time to complete all financing arraignments.“We will be making a request at the January 21 Tulare City Council meeting asking for an extension of time” to buy 60 acres from the city where they will build the plant. As it is, the company was supposed to have completed the purchase of the site by January 15, 2014.The new date would be June 30, 2014.
“We’re close to completing the development process that is the prerequisite to its securing the required total of $350 million non-recourse financing” says President and Manager Project Development Jeffrey F. Lee.Mr. Lee also announced “We are very pleased to have secured a letter of intent for the supply of the 4 million pounds of milk that the plant will process each day into 153 million pounds of American cheese, 10 million pounds of whey protein concentrate, and 73 million pounds per year of dried permeate.” The deal with an unnamed milk cooperative helps CaliCheese secure construction financing.
“We are equally pleased to have secured advance commitments for the purchase of the totality of the cheese” that will be made.Asked if he would favor the extension of the agreement made a year ago,Tulare Mayor David Macedo said “ with a project this big I am not surprised there might be a delay. Since we don’t have money tied up I don’t see a reason why we should say no.” After all,Tulare “could use the jobs.” The big plant would employ over 200.
The company will be meeting with identified sources of senior debt and subordinated debt by the end of the month, and has provisional commitments for the complementary project finance equity. It expects to close the $350 million financing by June 30 at the latest, and for ONEsource Facility Solutions, its lead engineer/constructor, to complete the engineering and commence site preparation,to be followed by construction.The $250 million plant with over 200 personnel in what is called “well-paying jobs” will start operations in 2Q 2016.
The nearly 60 acres of industrial and would sell for around $2.1 million. The property near the city Wastewater Treatment Plant was the subject of a lengthy environmental impact report and then an extended lawsuit as the city sought approval for a meat packing plant. That plant never materialized but the final EIR was close enough in scope to the proposed cheese plant impacts to be used for CEQA approvals for this project.CaliCheese has been talking to the city since mid 2012 and offer appreciation to both the city and the county EDC for their efforts says Lee.
The city agreed more than year ago to reduce sewer hookup fees to help the project move forward.“No other company is bidding for this land” reasons Macedo.The fortunes of cheese makers in the state are on the rise as booming export demand and US consumption continues to climb. Better prices for dairy products is “allowing the local dairy industry to heal” says Macedo who works in the industry. New processing capacity in the area will offer another way to add value to the billions of dollars of milk made locally.
Meanwhile Tulare “continues to think about the future” adds Macedo acknowledging that the city is wanting to purchase another 90 acres nearby for future uses.