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Investment Profile

Don’t Fence Me In

by Mark Arend

This is true more times than not: Locating a facility near a booming metro is as good if not better than locating it in the middle of that metro. Take Medina County, Texas, on the west side of San Antonio. Businesses there benefit from being on the I-35 Corridor just 150 miles north of the Mexico border on the side of San Antonio that still has abundant room for development. The county’s other main highway, US 90, running east-west, is being widened from four lanes to six.

Medina County Judge Chris Schuchart, who takes an active interest in the county’s economic development prospects, explains the significance: “I joke with San Antonio lawyers that I could drive from [Medina County seat Hondo] to the Bexar County Courthouse [in the heart of San Antonio] faster than most of them could get there. There’s nothing between me and there except a highway that’s not crowded.” And available, affordable land compared to northern and eastern San Antonio suburbs, says Schuchart. “It’s relatively inexpensive — perhaps $5,000 to $10,000 an acre. With Laredo down I-35, we’re just two hours from the largest inland port in America, and San Antonio is just 20 minutes from here.”

MAP

Lytle is the first town in Medina County heading out of San Antonio on I-35. Mayor Mark Bowen points to “a lot of land that is available and is still reasonable for manufacturing or other facilities — they certainly would have enough land on which to do that. We have a good workforce, a lot of people that live in the area.” Add a team approach to finding the right site to that list, says the mayor, nodding at Ruben Gonzalez, Go Medina County Community Partnership’s point man in Lytle. “We consider ourselves an extension of San Antonio,” says Gonzalez. “We’re serviced by CPS Energy, so we have the same electrical capability as the city.”

And a lot more, for a town of its size. A recent study found that 864,000 people live within a 30-minute drive of Lytle; the town has the best property tax rate in the area, at $0.42 per $100; an ample supply of large commercial tracts along I-35 for manufacturing and distribution; and a growing supply of residential real estate.

A Powerful Advantage

Still, for all its strategic significance to Medina County and the San Antonio metro area, about 10 miles of I-35 run through the county, in its southeastern corner. US 90, however, crosses the central part of the county, leaving Bexar County, through Castroville and Hondo to points west. Union Pacific rail runs east-west through the breadth of the county, and a north-south line is also adjacent to I-35.

Trade-related traffic to and from Mexico has precipitated infrastructure improvements in Medina County, which at the same time is absorbing San Antonio growth on the city’s western side.

“That’s the reason everyone is being very proactive in terms of infrastructure,” says Gonzalez, who spent time working in the San Antonio Chamber’s economic development office. “One of the biggest things companies were excited about was being on our own electrical grid. We’re completely separate from everybody else in the United States.”

Plane

Texas Aircraft builds the Colt light sport aircraft at a facility at the South Texas Regional Airport in Hondo.

Photo courtesy of Texas Aircraft

Power supply and cost are of paramount importance to data centers, and Microsoft happens to be building one on the Medina-Bexar County line, north of Lytle. “Medina Electric Cooperative also does a great job,” adds Gonzalez. “That’s the reason we’re having so much success inside the county — we have a good solid electrical grid. That’s a really important point.”

Vulcan Materials, the nation’s leading producer of construction aggregates — crushed stone, sand and gravel — is preparing to open its largest facility yet and its second in Medina County. The quarry will serve the Gulf Coast market, says Tyler Lowe, manager of community and government relations. “We’re really looking forward to this being a crown jewel facility for us to produce a lot of materials and supply, essentially for the greater Texas market,” Lowe explains.

Why Medina County?

“A few things jumped out about Medina County,” says Lowe. “Certainly, it’s a business-friendly environment. County leadership has been great. Each city we work with is excited to have us there. They see the value of business for their citizens and for the growth of the county.”

Proximity to San Antonio is a major advantage to Vulcan Materials, notes Lowe.

“That accessibility for us is particularly huge. Obviously, being in the construction aggregates business, we see that growth coming toward Medina County. So it gives us accessibility to San Antonio, for both shipment of our products into there, and it’s also near where that growth is coming. Also, not being in San Antonio, we don’t have to deal with some of the traffic congestion that’s part of being in the middle of the city. It’s nice to have that accessibility without being in the thick of it. And when it comes to quality of life for workers, it’s huge to have that accessibility, but at a lower cost — and maybe a little bit better pace of life.”

A Warm Welcome Seals the Deal

Hondo is a long way from Renton, Washington, and other aircraft assembly locations in the United States. But aircraft assembly does take place in Hondo, thanks to a Brazilian aircraft manufacturer that picked the South Texas Regional Airport there — a former air force base — as the location at which to build and test its Colt light sport aircraft.

Texas Aircraft founder Matheus Grande explains: “A lot of pieces came together for us to end up in Hondo. We initially looked at California, Texas and Florida. One of the reasons we went with Texas was the strong former military workforce. It’s good to have former military personnel, because they’re very disciplined, and hiring them is a way to give back after the job they did for the country.”

Soccer

Photo by Pat Marince

Grande says he focused on locations in the Houston-Dallas-San Antonio triangle for logistics and workforce availability reasons, visiting many airfields in the region but not finding the ideal location. A legal advisor involved in the site search mentioned the Hondo airport, and the rest is history.

“I came to visit Hondo, and when we met the city authorities, we were very warmly welcomed,” recalls Grande. “This is what we were looking for — not only a reasonable rent and a nice hangar, but a city that would really welcome us and help us to make it happen. We dealt with other cities, and we had the chance to meet with different authorities. But here, they really wanted to help us to make Texas Aircraft successful. The city was super helpful to us and did their best to help us to move in.”

Texas offers a range of financial incentives, notes Grande, but being a self-funding company, those were of less interest than other benefits, such as assistance in refurbishing the hangar space and assisting with licenses and permits. Other location benefits include four runways and uncrowded airspace. “Every aircraft that comes out of production needs to do flight testing, and this is a very safe place to be,” says Grande. “We didn’t want to be in a crowded airspace — it’s very calm here with very friendly people around.”

Proximity to San Antonio’s international airport makes it easy to get back and forth to Brazil, where Texas Aircraft’s R&D takes place. Grande makes that trip many times per year.

Other aviation businesses at the Hondo airport include Corrigan Air Center, which performs interior completion services and exterior finishing on aircraft ranging from light turboprops to large business jets, and Hondo Aerospace, which specializes in aircraft part harvesting and storage.

‘We’ll Make it Happen’

These and other businesses found in Medina County the people, the space and the business climate that enabled them to do what they do sooner rather than later. Medina is home to plenty of workers — military and not — who would prefer not driving into San Antonio, notes Terry Dickerson, a developer in Castroville with deep roots in the county. Property in the county is among the most affordable in the metro area, and county officials will make becoming operational a snap, he relates.

“We want good corporations to come in that want good people, like our veterans, many of whom are just in their 40s and want to work,” says Dickerson. “They have a good military background. And then you have the farm boys that are tired of farming, or their daddy sold their farm to a developer. But if a project wants to come to the county, we’ll make it happen. Our county commissioners and our county judge are pretty savvy businesspeople. They’re going to make good, wise decisions. They’re the type that if they don’t think a [project] will work, they’ll tell you. They’re not going to run you around. Red tape would not be an issue, especially if it’s a business we feel is legitimate and will be here to stay.

“I would tell any CEO,” Dickerson continues, “if you want to live in a nice place and have all the conveniences of a big city and have a good school district, for the kids and for the parents that will be working there, you can’t beat Medina County — quote me on that. If you’re a good CEO, the first thing you have to think about is your employees. If they’re not happy where they live, they’re not going to be happy at work.”


This Investment Profile was prepared under the auspices of Go Medina County. For more information, visit gomedinacounty.com, or call (830) 444-2208

Departments

Don’t Fence Me In

Like the old bromide about making sausage, sometimes you don’t want to see how a deal was put together. But in the case of “Project Sausage” — the new $33.5-million Bob Evans Farms headquarters announced last March in New Albany, Ohio, just outside Columbus — the substance appears to live up to the sizzle for everyone at the table.

Legend has it that the late Bob Evans himself, who was born in 1918 near Toledo and had farm-raised the company from the southeast Ohio town of Rio Grande since opening his first restaurant in 1962, was told that he couldn’t keep running such a big company from Rio Grande. So he headed north on Highway 23, got near Columbus, and asked if he had yet reached the city limits. When told that he had, the legend insists, he got off at the next exit and said, “Okay, the corporate headquarters will be right here.”

“There never was a true master plan,” says legend re-teller Joe Eulberg, the executive vice president of human resources for Bob Evans whose responsibilities also include corporate communications, philanthropic functions and leading the renovation of the original Bob Evans Farm. Instead, the company took the piecemeal approach as needs arose — buying the adjacent Southland Mall, for instance, when they needed more office, test kitchen and training space — resulting in a hopscotch effect and eventually, that hemmed-in feeling.

“It was getting to be a real pain,” says Eulberg of the campus first established in 1968. “We have a lot of space here but it doesn’t work very well, and is carved up every which way.”

There’s a master plan now, thanks to the marriage of long-term corporate strategy on the company’s part with the long-term vision and master-planning execution that is the Village of New Albany. The latter has been led in large part by development firm New Albany Co. and its founder Leslie Wexner, founder, president and CEO of The Limited Brands, who, as he did with NetJets a few years ago, took a personal interest in Bob Evans Farms’ future.

“You almost can’t say enough good things about Les Wexner and what he’s doing there,” says Eulberg. “He saw what we need to look like and feel like, and it’s exactly the same thought process he has for the community. He was astoundingly generous, making sure we have the resources, making sure every shareholder, employee and customer will be proud of what the Bob Evans headquarters will be.”

In a word: iconic. The match crystallized at a town hall meeting hosted by Bob Evans CEO Steve Davis, who flashed slides of rolling fields and white fences. Everyone identified it as the original Bob Evans farm. But it turned out to be New Albany. “It already looks like what Bob Evans looks like,” says Eulberg.

Reasons to Explore, Reasons to Stay Home

In an increasingly mobile and competitive landscape, the Bob Evans project story demonstrates that a company’s out-of-state alternative may be more real than ruse, and a company’s community-minded principles can be too.

The move out of the City of Columbus rankled its share of city officials, who felt they had made a strong offer with a site in the Polaris development in the city, and offered an incentive package totaling $14 million, compared to a New Albany package that totaled almost $10 million. The move is also receiving from the Ohio Dept. of Development a 70-percent, 10-year tax credit for promising to add 150 jobs, and $7.2 million in additional payroll, to its existing headquarters staff of 400.

Eulberg says the company truly went the extra mile to see how it could somehow reconfigure its existing 38-acre (15.4-hectare) campus, but all the options “were far more expensive than going greenfield, because of the way it had been built ad hoc over the years, even when you adjust for the fact that we owned the land.” There was also a projected three-year campus disruption factor, versus 32 months with the greenfield option: “So for about three years you’d completely turn the place on its head, build something sub-optimal and hurt productivity.”

As Eulberg’s group looked around, they also realized that special requirements such as food innovation and product development spaces did not mesh well with most existing building stock. “You can’t just take eight stories of a downtown high-rise,” he says. Thus began a robust greenfield search process led by consultant Tom Carter. One option was land Bob Evans owns in Richardson, Texas, from its acquisition of the Country Sausage company, another homegrown, farm-based family enterprise originally run by the Owens family. Carter, Eulberg and Davis knew the area from having lived there. And the asset in Richardson that Bob Evans Inc. had acquired was not yet fully utilized.

“It’s a beautiful kind of family farm in a very urbanized dense setting,” says Bill Sproull, president and CEO of the Richardson Economic Development Partnership. He says the city and its telecom corridor, including the Samsung Telecom USA headquarters across the street from the sausage company, “kind of grew up around the original Owens farm. It’s not a huge property, but it’s very idyllic, an oasis in the middle of an urbanized corporate suburban community.”

“It’s a company with a national presence, and Dallas is easy to travel out of, with an ample work force and an attractive cost of living,” says Tom Carter. “So there were a lot of good reasons to consider it. It wasn’t like we were throwing a dart at a dartboard tying to find a place outside of Ohio. You could easily make a case for it.”

Jennifer Chrysler, director of community development for the Village of New Albany, says any doubts about the viability of the Texas option don’t give enough credit to the Ohio Dept. of Development nor, by corollary, to local agencies like hers.

“I doubt there is a whole lot of trickery going on. We’ve received calls, and you know when they’re going to leave and when they’re not,” she says. “The telltale sign is holdings in another state.”

She says the old idea that just because you grew a company in one state you’re going to keep it there indefinitely no longer holds water.

“I don’t think anything is final anymore,” she says. “It’s where you can grow a business. So I definitely think that there was a real threat to explore other opportunities outside Ohio. Also they’re a retailer, and their goal is to expand their footprint. You grow in other places. They’re already a staple here in Ohio.”

The company employs 14,000 Ohioans, and its mix of various facilities, along with nearly 200 restaurants in the state, generates almost $36 million in tax revenue each year in Ohio.

The Vision Thing and The Right Thing

Ultimately, says Joe Eulberg, his company was planning for many decades into the future. “That was filter number one,” he says, followed by strict economics, which included incentives. “Regardless of whether you like or don’t like subsidies, if they’re being offered and you don’t ask for that, you’re not doing your duty for your shareholders,” he says. “The state and New Albany were a class act. They didn’t really play the nickel-and-dime game so much. They wanted to put together a package that makes it compelling from the get-go, rather than 75 rounds of negotiations.”

Just as important for Bob Evans was its sense of duty and obligation to the City of Columbus and its soon-to-be-former campus. “I’ve never worked with a company that has more integrity than Bob Evans has,” says Carter.

“We give the state a lot of credit for being willing to get out of the bureaucratic box,” Eulberg says. “We’re not going to leave a place and board the window up and hang a sign. We want to make sure that this place continues to be a place that has good jobs, growth and activity. It will be a great home for somebody. The state was very helpful. They got very creative in designing things that are key parts of marketing this place. We think there will be more jobs on this campus after we leave than there are now.”

Chrysler says even before her team knew it was Bob Evans, they learned that it was a company interested in becoming part of the fabric of the community, and which had a strong emphasis on values and customer commitments, all of which, she says, “fit to a ‘T’ the types of companies we had already attracted.” And once the prospect was identified, knowing the physical constraints of its Columbus campus made it less awkward to pursue. “The professionals we work with know that businesses have to make decisions that are best for their functionality,” she says. “Government can’t be a hindrance to that, nor can we necessarily guide it that much. The private sector drives business and drives decisions, and we all understand that.

In New Albany, instead of the standard “coming soon” sign, Bob Evans has erected a silo that matches the one found down on the farm in Rio Grande. The project is the latest manifestation of a 25-year-old master-planning vision that began with the needs of corporate end users receiving just as much attention as the needs of homebuyers. Chrysler says many companies “like the idea that they know who their neighbors are today and who they’re going to be tomorrow.” They also like the fiber-optic network built with utility AEP and operated by Bluemile Inc. “That infrastructure has saved the average company between 15 and 20 percent on their cost of technology,” says Chrysler, noting the recent locations of several mission-critical facilities in New Albany from such companies as TJX and Nationwide.

Thus a village of 14 sq. miles (36 sq. km.) and 7,500 residents will soon have 12,000 people working in its business park, where 1.9 million sq. ft. (176,510 sq. m.) now are under development.

For the record, the regional economic development coalition Columbus2020, just launched last year to serve an 11-county area, recorded the Bob Evans project as one of many expansion/retention successes among the area’s impressive list of projects early this year from such companies as scale maker Mettler Toledo, logistics firm Exel and food packaging firm Pactiv. Jennifer Chrysler gives Columbus2020 a lot of credit.

“They’re doing a very good job of helping each of our communities to attract business from outside the state,” she says, noting that a rising tide of project activity for all means less likelihood of conflict between communities. “We have a great relationship with Columbus despite some mixed feelings about this one project. We probably always will have a great relationship with Columbus, and continue to work together to best market ourselves as a region.”