Big Cheese Plans
Design of Tulare Cheese Plant Ready Next Month

Tulare - Land O Lakes is readying design plans for what will be one of the world’s largest cheese plant in terms of volume, reliable sources say.  Last week the company completed purchase of 18 acres it had in escrow over the past year from Southern California Edison next to their Paige St. plant in Tulare.

“I can confirm we bought the 18 acres,” says top staffer Bob Brown of Dairyman’s/Land O Lakes.  “As far as our plans for a cheese plant it will be August before we can make any announcement,” he says.  That is when the budget item will be before the Land O Lakes board, he says.

That 300,000 sq. ft. plant is currently used for storage by US Cold Storage but they will vacate as soon as the big Minnesota co-op is ready to begin remodeling work at the former Kraft cheese facility.

Sources say that LOL will attempt to joint venture the big project with another cheese company, probably Kraft, and may seek approval from the LOL board in the next 2 months to fund the project.  The plant would be part of Dairyman’s Cooperative Creamery who joined the LOL cooperative in 1998 buying both the former Kraft plant owned by the company CPC at the time and contracting for the purchase of the 18 acres next door.

The site is more than a mile from Dairyman’s main plant facilities in downtown Tulare - already the single largest dairy processing facility in the nation.  The plant here is supplied by some 240 member dairymen that milk cows within a 30 mile radius of Tulare.

Dairyman’s has produced in the range of 60 to 80 million lbs of cheese annually in the past but with the next plant that amount may triple because Land O Lakes world wide marketing efforts needs the product.  The cooperative has the milk supply to make some 300 million lbs of cheese annually.  California produces only 1 billion lbs of cheese per year.

Goshen In The Running For Mozzarella Plant

Goshen - Question: Where does the big cheese locate?  Answer: Anywhere they want.  The next few weeks may tell the tale.  One of the biggest cheesemakers in the U.S. is down to a short list of sites for a massive new mozzarella plant and Goshen may be on that list.

The community of Goshen is said to be a top contender for the new Leprino cheese plant likely to be sited in Tulare or Kings County soon.  A company spokesperson told the Voice that privately held Leprino based in Denver will pick a site for what is described as the world’s largest mozzarella cheese plant by the end of July.  The plant would produce some 1 million pounds of cheese a day and employ 350 people.

Leprino spokesman Larry Jensen told the Voice back in February that the family owned company wanted a new plant site since the current Lemoore facility - an older former Knudsen plant is at capacity producing less than a third of what the new plant is expected to produce.

Goshen is considered a favorable site because it is near enough to local dairies, has availability of adequate sewer capacity through its connection deal with the city of Visalia and enjoys good truck and rail access on the Union Pacific (old SP) line.  Leprino is said to prefer a location on the Union Pacific line over competitive rail companies including the feeder line San Joaquin Railway that serves its current Leprino plant site in Lemoore.

The company is looking at land owned by the Penny Newman Grain Co. in Goshen next to Cargill Grain on Rd. 68.  The site is in the Goshen Redevelopment District.  It can be expanded by adding a few parcels adjacent that landowners are willing to part with.  That would give the company a square parcel on about 60 acres to build the new cheese plant.

The company is also considering a Visalia location, Tulare, Hanford Industrial Park, Lemoore and Corcoran sites, sources say.  Visalia would like to have the company locate in town but may have to settle for the fact most of the jobs will be held by Visalians.  The plant would use the Visalia sewer system now that the Goshen sewer system is connected.

Visalia’s sewer capacity is more than any of its competitors although Kevin Northcraft, Tulare city manager, says there is a plan to upgrade their sewer as companies require the capacity.  Tulare will already be adding a huge new cheese plant in coming years owned by Land O Lakes.  (See other story)

Hanford is experiencing capacity problems on their sewer system, but may be another contender because of proximity to big dairies and a recent USDA grant that may mean a low purchase price.  They  recently got a USDA grant to buy additional land next to the Industrial Park to try to lure Leprino there.

In addition, the company has said it might consider not building in the central valley despite the large milk supply because much of the product will be shipped to the Southeast U.S.  Still the betting is that Leprino will build in Tulare or Kings County.

“They already have enough milk to supply the new plant here,” says Gary Korsmeier, CEO of California Milk Producers who supplies some milk to the big cheese maker at the current Lemoore location.

Mr. Leprino himself is expected to visit the Goshen location and other candidate sites here in the next few weeks.

Mozzarella cheese is one of the fastest growing dairy products popular in both pizza, Italian and Mexican foods and source of low fat calcium.  Leprino Foods uses an estimated 5% of the nations milk supply to make its popular cheese at 8 plant locations.  1998 sales by the company founded by an Italian immigrant in 1950 was about $1.25 billion.

Visalia Mall May Add More Stores / New Anchor

Visalia - The owners of the Visalia Mall attended the recent Las Vegas shopping center convention armed with schematic drawings showing how the busy shopping center might expand, this, according to reliable sources.

Spokesman for the Utah based company, JP Realty, confirms “we do have alternative scenarios that would allow expansion,” says VP Rex Frazier.  The 450,000 sq ft mall is nearly full and land locked by housing to the west, and streets on the other three sides.

The source says the drawings show the addition of another anchor store and possible double decking of the retail corridors in order to add tenants - the preferred solution to adding space when a mall is out of room.Local mall officials and city sources have heard the same story.

The fact that the drawings were shown to prospective tenants is an indication the owners of the mall, J P Realty, want to grow the nearly full retail powerhouse.

Those conceptual plans included a new parking structure and additional land the mall may seek to purchase to make room for another 150,000 sq ft department store - the same size as the current Gottschalks.  The mall also has a 90,000 sq. ft. Penneys.

The recent plans may be a reaction to reports by some property developers that there is pent up demand for not only another major department store here, and some other retail outlets not yet in the market.  Some months ago developer Andy Mangano suggested two departments stores wanted to come to Visalia but preferred a location on Highway 99.

J P Realty has watched the growth debate in Visalia this year and have seen proposals to add thousands of square feet of new retail in all quadrants of the city.  To the degree they can draw some of that retail store demand to their site, “it’s better for the mall and better for Visalia,” suggests Gottschalks board chair Joe Levy.

Most successful malls are dominant in their market and are built with parking garages in a tight cluster with other stores.  “It’s better to increase the critical mass in one location,” he says even though a new department store would mean competition for Gottschalks here.

Who comes to mind as a possible new entrant to Visalia?  The list is short.  May/Robinson’s, Macy’s or Dillards.  May/Robinson’s is in Bakersfield and Santa Maria but no further north, Dillards is in Stockton and soon Palmdale and nowhere else in the state.  Macy’s of course is in Fresno, but may think 3 or 4 years from now we’ll be ready for one of their trendy stores.

“We have an excellent relationship with all the stores,” notes JP Realty’s Rex Frazier. Double decking the corridor promenades would allow J P Realty to add more stores to the mix.  The mall is nearly full today with only the former Surf Shop space in center court available along with the old food court.  GAP may take the central space but after the holidays.  The mall has Old Navy (owned by the GAP) there but there is no GAP in Visalia.

The likely spot for a parking garage would be on the mall’s north end, perhaps nestled up to a two story department store in turn connected to a second story promenade.  Another theory is that the mall will make an offer on Sallee Lane homes to accommodate an expansion.

Still another wild possibility - rumor has it that Orchard Supply is looking for a new spot to build a larger store leaving the property across the street from the mall available and a pedestrian bridge crossing Walnut to connect the two sites.

Talk that another mall site might be located out on Highway 99 makes the owners of Visalia Mall and other Mooney merchants with large investments, nervous.  Rather than wait for the growth debate to decide their future - some sort of city decision could come this fall - people like J P Realty who have invested millions in their mall might rather skim off some of those stores than allow their Mooney empire to crumble.

People need look no further than Hanford to see what happens to the old mall if a stampede to a new mall begins.  The older Kings Mall was bulldozed. 

CIGNA HealthCare to Build New Service Center

Visalia - CIGNA HealthCare and the City of Visalia announced today that CIGNA will build an advanced technology National Service Center on a 12-acre site.

The partnership will allow CIGNA to retain its existing workforce of 750 and add more than 200 to 300 new jobs in Visalia.  A major ground-breaking ceremony will be scheduled within 60 days.

The structure will provide 131,700 square feet of usable space, designed to accommodate as many as 1,000 skilled service and support staff members, using state-of-the-art communications and technology.  The site is located at the northwest corner of Tulare Avenue and Akers road, south of Highway 198.

The total estimated cost of the project  is $34 million, including construction, outfitting, furnishing, moving and an initial 10-year lease with the developer.  Construction of the building will begin late this summer and is scheduled for completion in the year 2000.

“We are pleased to be able to expand and upgrade our operations here in Visalia – a community we have been part of many years,” said Rich Keena, regional vice-president of CIGNA.  “We also want to acknowledge the efforts of the City of Visalia for working closely with us to make the project a reality.”

CIGNA is already one of the city’s largest private employers, noted Visalia Mayor Wally Gregory.

“The Visalia City Council has been diligently working with CIGNA officials to reach an agreement that will locate CIGNA’s operations to a larger facility,”  Gregory said.  “This expansion will allow CIGNA to increase its Visalia workforce and help us in our continuing efforts to reduce the jobless rate in this area.”

The City of Visalia is selling the land at appraised market value to CIGNA for the development and construction of the proposed office development.  Additionally, the city is providing improvements on Akers Road, Tulare Avenue and Cypress Avenue to facilitate the anticipated increase in traffic.  These improvements include widening Akers Street and Tulare Avenue, signalization improvements and the extension of Cypress Avenue.  To facilitate the creation of more than 200 new jobs, the city formulated a development fee incentive that will encourage the company to remain in Visalia for at least 10 years.

The site, owned by the City of Visalia, is zoned for this type of development.  More than 650 employees at the center in Visalia now provide claim processing and other services to CIGNA members, health care providers and employers.  The center, one of 29 CIGNA HealthCare sites around the country, processed nearly 5 million claims and serviced more than 3 million calls in 1998 for smaller firms and large national accounts.   The new structure will allow for significant expansion to meet business growth.

The project developer will be Dorn-Platz, Inc., of Glendale, who developed the building that houses CIGNA HealthCare’s state headquarters in Glendale.  The architect will be Ware and Malcomb of Irvine.  Work on the project will be subcontracted extensively to local firms.

The new Visalia facility will use advanced communication, computer technologies and management systems to manage its growing service demands.  A similar CIGNA service center in North Carolina was named a “Call Center of the Year” for 1997 by Call Center Magazine, a leading trade publication.

CIGNA HealthCare is one of the nation’s leading providers of health-benefit programs, with products marketed in all 50 states and managed care networks serving 45 states, the District of Columbia and Puerto Rico. 

Call Center Eyes Visalia

Job Search Center May Have Displaced Jobs

Visalia - The soon to be vacant 75,000 sq ft office building leased by Cigna will be vacant by next Spring when Cigna will move into their new office complex nearly twice that size over on Akers (see other story).  Now the County who has been looking to find a place for an innovative One Stop job search center has snapped up the Visalia building from the current owner signing a lease beginning next year.

Only trouble is that the City of Visalia was working with a potential new employer - a so-called Call Center - says mayor Wally Gregory, that might have meant 300 to 400 jobs that “had a strong interest in the building.”

“We tried to get the County to back off since this could be new jobs to the community but it was too late,” he says.  “Its kind of ironic they are putting in a center to help unemployed people get jobs and here are some real jobs that they are displacing.”

Gregory says he tried to get help from supervisor Bill Maze who represents Visalia, but Maze said he couldn’t do anything.  “We asked them not to do it.  It’s kind of disappointing.”

Gregory says the Call Center liked the building which is set up and wired for a call center already - that’s what Cigna does there where more than 700 work.

But city manager Steve Salomon says the potential employer may still come to town and that negotiations are continuing. “I understand the County had trouble finding a place where they didn’t have to commit long term lease.”  The County had been working with 5 developers around town for the past 6 months in a build to suit development plan.  But when the Cigna building became available, the County saw an opportunity to locate the center that will house the PIC, EDD and other job search agencies.

The County also bought the other big insurance building in town when Wausau/Nationwide downsized a few years ago.  While the deal was a good one for the public sector, some economic development strategists point out that the type of building can help draw major new employers to town because they are available and ready to move in.  Many companies make their decision on location in a town based on whether there is space that can be occupied quickly.
It turns out that this insurance company whose name still stands at the entry to the big south Mooney building will soon vacate the building altogether relocating in town to smaller space.

Salomon says innovative building techniques can cut the time to build a new office building to a fraction of former schedules.  The new 132,000 sq. ft. Cigna office will be built over about 7 months. 

Key Health Closure
Health Care Providers Feel The Pain

Tulare County - Locally originated Key Health Plan Inc. announced June 28 that they would close at the end of December leaving more than 111,000 plan members to fend for themselves after that time.  The health plan begun by local hospitals and physicians in 1996 is now 80% owned by BETA Healthcare Group which purchased that share from Wausau Insurance last year.

Like big national HMOs, Key Health is feeling the pain of higher costs and lower reimbursements - the same pinch local providers, medical groups and hospitals are feeling, says Kaweah Delta administrator Tom Johnson.

“The managed care idea was a good theory when it came in,” says Johnson, but the reality is that payment is not enough to manage the patients we have.”  That applies to hospital or medical groups who participate in “at risk” managed care contracts where they are paid a certain amount to handle a population of people.  The HMO model is based on providing efficient care at lower cost and if it can’t - everyone who participates in the health plan is disappointed, he says - from patient to physician to the stockholders of the HMO.

Johnson says in Tulare County’s case the general population tends to be sicker - to require more expensive treatment than the average.  That’s true in part because of the level of poverty here and the presence of high maintenance diseases like diabetes and stroke.

That’s why Kaweah Sierra Medical Group, reeling from some of the same cost squeeze, decided to end a managed care contract with the health plan Health Net.  Instead, they are offering the health plan based on the old fee-for-service model.

Health providers are being squeezed by MediCal and by Medicare with lower reimbursement.  The big run up has been in prescription costs, says Johnson.  “Pharmaceuticals used to amount to 15% of premiums, but today they are 30%,” he says.  Drug companies have direct marketed to the public and new drugs are very popular including Viagra, Prozac and Lipitor that is great for patients but amount to high costs for health plans.

The government’s decision on regulating HMOs is cited as one reason for the closures.  In the past few days big HMOs nationwide say they are pulling out of the Senior Care market - a process they already went through in Tulare County.
Key Health was said to be Tom Johnson’s brainchild after the long time administrator saw local health care dollars fleeing the area to large corporate owned HMOs and insurance companies.  The local HMO was owned 10% by local hospitals and 10% by local physicians.  They too, lost money on the deal.

It had plans to expand beyond Kings and Tulare counties but that never got off the ground.  The prevailing theory today is that you need larger patient base than 11,000 members to spread costs.

About 25 people work with Key Health who will be out of a job.  The health plan’s membership came from KDDH employees, City of Visalia and County of Tulare.

One view is that Key Health membership will be sold to another larger provider like Blue Cross which has large presence in Tulare County already.  The company manages the MediCal health plan here.

Highway 198 Gets Recycled

Visalia - There are kudos all around for the job contractor RL Brosamer is doing on the West 198 project - millions of dollars under budget and to date about 6 months ahead of schedule.  By this October you will likely be able to cross 198 on three bridges at Demaree, Akers and Shirk as the Bay Area contractor aims to finish up as soon as September 2000 on the entire $100 million project.

Not the least in the innovations Brosamer is bringing to the project is the recycling of the old 4 lane expressway into new base rock for the reborn depressed freeway being dug now.  “We’re aiming at recycling about 80,000 tons of old concrete and asphalt - about half the tonnage needed to lay down the base rock for the new freeway,” says Mike Ostrom the company’s project manager.   The value of that rock if it had to be replaced by new aggregate would be about $10 per ton or $800,000.

The contractor has set up a rock crushing and loading staging area at the corner of 198 and Akers right next door to the project.  The company saves on both tonnage and hauling costs.  “In other highway projects the torn up road material would be a disposal problem,” says Ostrom who declined to detail just what saving the company has by using recycled rock.

Interestingly, opponents of the Kaweah River Rock project had suggested more reliance on recycled rock as an alternative to the controversial river mine near Woodlake that supplies at least some of this project.

Ostrom says Brosamer “takes an aggressive approach to these projects” that includes night work when necessary, coordinated work scheduling and use of the big Hattachi excavator that digs the 30 ft holes where the new freeway will run.  The big shovel is at Demaree today digging around a traffic circle the contractor has put up to allow traffic to flow.

Ostrom says Visalia can watch the Demaree, Akers and Shirk bridges go up over this summer that will mean each of these busy intersections will no longer impact cross traffic as soon as this October.  Currently delays on the 2 mile construction corridor relate to stop lights at Akers and Demaree and the crossing hazard at Shirk that will be far better in just a few months.  For the Shirk interchange the freeway project will be done this fall.

The crushing operation at the southwest corner of Akers and 198 is on city owned land that is scheduled to be re-zoned for a new shopping center.  Ostrom says he is aware of how the freeway project has stimulated development interests up and down the thoroughfare.  “It is a real lesson in economics,” says Ostrom.

The only negative some property owners have complained about is the fact the frontage roads in some portions of the freeway are higher than the surrounding land making drain water a potential problem for the property owner in the future.  The big Kmart center parking lot is lower than Noble for example.  In the case of one property owner, Dave Hyde, CalTrans settled a grade dispute over Hyde Park with the Visalia property owner.  CalTrans says the grade difference is not a big problem and that “it’s no mistake.”

The recycling of Highway 198 benefits the city and county by not filling our landfills.

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