Amy's Kitchen to expand in Santa Rosa

Fast-growing food maker Amy’s Kitchen is moving forward with expansion plans in Santa Rosa, seven months after it shelved the idea of building a huge new production facility in the city.

The Petaluma-based company will begin producing a new line of entrees and snacks in a former food processing facility the company has leased in southwest Santa Rosa.

“Our growth has been faster than we expected this year, so we had to move quickly,” said Andy Berliner, who founded the organic frozen and packaged foods company with his wife in 1987.

The multimillion-dollar project is expected to create 150 new jobs, fewer than the 800 jobs once envisioned as part of a $50 million state-of-the-art facility first proposed in March 2013.

That project hit a snag when the company realized how costly it would be to hook up to the city’s water and wastewater system. It instead decided to build a $95 million facility in Goshen, N.Y., to be closer to its large East Coast market.

But the New York plant won’t be up and running for two years, and in the interim, the company continues to see significant demand for its vegetarian products. It forecast growth of 12 to 15 percent this year, but that number has come in closer to 23 percent, and would have been 30 percent if the company had sufficient capacity, Berliner said.

The strong demand for its products, combined with a positive relationship with the city of Santa Rosa and the Sonoma County BEST program, helped the company see that a more modest expansion in Santa Rosa still made sense, Berliner said.

Local economic development and utility officials helped come up with a package of incentives that is providing significant value to the company, said Carolyn Stark, executive director of Sonoma County BEST, an economic development initiative.

A combination of state sales tax incentives, attractive power rates from PG&E and water conservation guidance from the city all played a role in the company reaching its decision, Stark said.

“It’s great news,” Stark said. “I think what we have accomplished is amazing.”

Last month, Amy’s Kitchen signed a two-year agreement to sublease the 56,000-square-foot former home of G&G Specialty Foods on Bellevue Avenue. The building was built in the 1980s and was designed as a food processing facility, said Tony Sarno, a commercial real estate broker involved in the deal.

Sarno represented Montreal-based dairy company Saputo Inc., which closed the plant in 2011 after it purchased G&G’s parent company DCI Cheese Co. It has been trying to sublet the building ever since, and Amy’s has been interested for about two years, Sarno said.

The sublease may only be for two years, but the company has long-term plans for the site, Berliner said. “We hope this is a permanent operation,” he said.

In addition to producing Amy’s expanded entrees, the company plans to make a new line of taquitos and breakfast sandwiches at the new plant, he said.

The property is adjacent to a 9-acre pasture that once was eyed for a production facility up to five times the size of the G&G facility. That project was shelved in part because preliminary estimates put the total city fees for both phases of the project at $34 million.

City officials say those figures were not accurate because the water and wastewater connection fees would have been significantly lower in light of water efficiency efforts the company has undertaken with the help of the city at its main production facility on Northpoint Parkway. Even so, Berliner said the company doesn’t have any immediate plans to move forward on building a new facility in Santa Rosa.

In addition to the New York plant, the company is adding 130,000 square feet of production space to its existing facility in Medford, Ore., where it expanded in 2006. The company already owned the land in Medford, has developed a reliable workforce there, and the water and utility rates are lower, Berliner said.

There are several incentives from which Amy’s will benefit.

The PG&E incentive works by reducing the costs for energy-intensive businesses by lowering their electric bills over the first five years in a new location. The first year’s benefit starts with a 25 percent discount, dropping 5 percent per year for the following four years until the business returns to regular electric rates.

The state also has a sales and use tax exemption for manufacturers that Amy’s will receive. The incentive eliminates the state’s portion of sales tax, 4.19 percent, on up to $200 million in equipment.

The city of Santa Rosa also paid for a water audit that was performed on the existing plant on Northpoint Parkway. The audit, which was done by the engineering firm Brelje & Race, has helped the plant reduce its water use by 30 percent to date, according to the company.

The city also has started design work on a special docking station that will allow the Laguna wastewater treatment plant to accept high-strength waste from food processors and brewers. Currently, Amy’s and others have to pay to truck such waste to the East Bay for disposal. But the receiving station will allow the Llano Road plant to recycle such food sludge by turning it into methane that can then power the gas turbines that power the plant.

The city planning staff also has been responsive and has helped the company understand the permitting process it needs to go through for the project, Berliner said.

“We’re working very cooperatively with them on it, and they understand our need to move quickly,” he said.

David Gouin, the city’s director of economic development, said the city has worked hard to stress that economic development is something every city department has a responsibility to support.

“We’re excited that our economic development team in the utility and community development departments have been able to assist Amy’s in expanding here in Santa Rosa,” Gouin said.

The company hopes to be up and running in the new location by January. Berliner declined to estimate the project’s cost, but said the company would be spending “a lot,” mostly on new equipment, he said.

In addition to its main 120,000-square-foot production plant, Amy’s also operates a 40,000-square-foot production facility on Sutton Place. It also makes candy and is opening a bakery in the large warehouse in Dutton Avenue previously occupied by Ritz Food Service.

The company now has about 2,000 employees, evenly split between Sonoma County and Medford. Revenues this year are tracking between $430 million and $450 million, Berliner said.

With three expansion projects underway in the U.S., the company’s biggest challenge is no longer production capacity, but rather finding sufficient sources of quality organic ingredients for its growing product lines, Berliner said.

The company opened a facility in Corby, England, in 2011, but was forced to close it a year later because the supply of organic ingredients hadn’t been sufficiently developed yet, Berliner said. Those supplies now are improving, and the company is looking at various locations in Europe to open a facility, he said.

You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com. On Twitter @citybeater.