By Michelle Price
UCBJ Managing Editor
NASHVILLE – Beyond the excitement of bringing new jobs to a community is always the untold story of the challenges that are overcome in making the deal a reality.
Thursday in Nashville at the state’s Economic and Community Development Conference, officials from across the state came together to hear the story of the biggest economic investment in Putnam County history and the challenges involved in landing it.
When local citizens gathered at DelMonaco Winery on Dec. 3, 2018, for the announcement that Portobello America was locating their first U.S. manufacturing plant and its North American headquarters in Baxter, they had no idea that only 14 days prior the site wasn’t thought to be in contention any longer.
The full story was shared with the state by a panel of elected officials and economic development experts including Lyndi Berrones, Tennessee Department of Economic and Community Development (ECD) consultant; Melinda Keifer, city of Cookeville economic and community development coordinator; Randy Porter, Putnam County Mayor; John Martin, Baxter Mayor; Stephen Crook, Highlands Economic Partnership Economic Portfolio Manager; and Cody Huddleston, ECD Upper Cumberland regional director.
Portobello looks to the United States
Portobello is the largest tile producer in Brazil, with over 2,600 employees worldwide and annual revenue of $50 million. To meet the needs of the rapidly growing North American market, Portobello began planning a U.S. manufacturing facility and a North American headquarters
The project started in April 2017 when the state issued a request for information (RFI) for “Project Burgundy,” a generic ceramic tile manufacturer. The first area that was being considered spanned from Cumberland County to Memphis and the I-65 corridor and I-24.
Tile companies typically look for about 100 acres, hire about 200 employees, and invest approximately $100 million in capital. The perfect layout for a ceramic tile manufacturer is a long linear tract. Because the manufacturing line cannot have any kinks, the building is often shaped like a football field.
Putnam County didn’t have a ready-to-go, publicly owned site like the RFP called for but submitted a few sites for consideration anyway.
The project changes
The project then changed, becoming a potential joint venture between the Brazilian company and a Mexican ceramic tile manufacturer. This new project was named “Project Venture,” with TVA and the state beginning a new location search.
Crook explained that the first meeting with company officials was outside of the traditional model. Instead of going through the state’s consultants, Jeff Durbin, a Portobello company consultant who happens to live in Cookeville, directly reached out to a friend on the Cookeville-Putnam County Chamber board and initiated that meeting.
Crook and local representatives met with the company and showed them the three sites available that almost met their requirements but weren’t perfect. One was located in Baxter, one was close to the Highlands Business Park, and one was a privately owned tract (the Mackie family farm) that had recently been listed for sale.
The search focuses on Mackie property
The Mackie farm was about 200 acres with 100 really good usable acres that the community had had its eyes on for decades. Crook shared that a change in ownership had brought this property on the market for the first time.
“While ECD was doing its typical search going down its typical paths, the consultant was running down his own path,” Keifer noted.
The companies loved the Mackie site. It was beautiful, but it wasn’t without its problems.
“There were beautiful caves, a couple of streams, like 32 wetlands, and there’s a sinkhole. If we kept digging, we would have found an Indian burial ground, I’m sure,” joked Keifer, remembering the environmental struggles they faced.
In addition to the environmental factors, the cost of the land was an issue.
Despite its issues, the Mackie farm became the companies preferred site in Tennessee. Although they were looking at other states, they kept coming back to this site.
The project was supposed to be a joint venture between Portobello, a Brazilian company, and a Mexico based tile company.
“It sounds great on paper, but it makes it very complicated to take two giant tile manufacturers to get them on the same page and to get them to play nice under the same roof and manufacture a product that they do not want to show each other how they manufacture,” Berrones said.
The ECD consultant was working with both companies but had non-disclosure agreements with each company, so he couldn’t tell each company what was really going on. These communication issues delayed the project and made it doubtful if the project would come to fruition.
During the time that the Mackie site was under environmental review, other factors happened, such as the city of Cookeville annexing the property and changing its zoning.
The search for other sites
Berrones, who was new to ECD, received a call from the companies saying the Mackie site was out and to come up with new sites in Tennessee or the state was out of the running. The project was also redefined, focusing solely on Portobello and was renamed “Project Sim” (Sim meaning yes).
She took 10 sites to Portobello at a meeting in Florida. Of those 10, only one would be considered, but the company brought up a site that they had looked at on Google Earth and remembered from driving by the site in earlier versions of the project.
The next week, they called Crook and asked to look at the old Baxter speedway site.
The speedway site had several issues. Putnam County had just optioned the property as a potential fairgrounds location. Also, there was an issue with a cell tower located centrally on the site along with 10 billboards.
Mayor Porter remarked that he had spent 3.5 years searching for a site for an expo center; however, from the committee meeting until the full commission, the votes to purchase the property dissolved. The site had also considered for the Hormann company, but they weren’t interested in it because of the impediments of the location.
Mayor Martin had just taken office and said that it was devastating to the city when both prospective deals fell through.
Portobello visits speedway site
Berrones brought the company officials to see the site and to see a site in Roane County on the same day.
The Roane County/Oak Ridge site was a Select Tennessee Certified site that had all utilities, roads and was shovel ready. It had everything the Baxter site didn’t.
The Baxter site was initially not ideal since it wasn’t linear and was two separate parcels owned by different owners, one of which wasn’t in the city yet. The site was small compared to what the company wanted. The road to the site was small and windy, not appropriate for semi-trucks and trailers to travel daily.
Additionally, there was a cell tower in the middle of the site. Cell towers have 40-foot guide wires that require a 40-foot easement around them, so you can’t build anywhere around it.
After the visit, company officials were still very interested. That left the local team to figure out gas, electricity, water, sewer, etc. on a privately-owned site.
Full proposals were requested, and costs for both sites were sent to the company.
Portobello requests final meeting with ECD and selects Baxter.
The company demanded one final meeting with the ECD leadership and were going to be in Tennessee for one day. That meeting occurred at the Gaylord Opryland Hotel during the 2018 Governors Conference, and afterward, company officials were invited to the luncheon. During the luncheon, both gubernatorial candidates were asked what they would say if an international prospect were in the audience to get them to locate in the state.
The company was apparently impressed with their answers because three days before Thanksgiving, they called ECD and said they were coming to Tennessee at the Baxter location. The company also needed to be able to market their tile as ‘Made in the USA’ and needed to announce the location before the end of the year.
The work begins
Berrones contacted Crook with the news. There was so much that needed to be done: there was Industrial Development Board incentives (a PILOT program was on the table) that had to be approved in a formal meeting that required seven days public notice, a sewer extension agreement that had yet to be finalized, a property ownership agreement, billboard agreements, future electric capacity concerns, etc., and this needed to be announced Dec. 3.
Keifer summarized the situation like this, “They are coming to make an announcement of a $150 million investment, and there’s not one signature on one piece of paper. No deal is worked out. The citizens of Baxter and our mayor has no clue how he’s going to extend the sewer, has no clue how we’re going to straighten that road, and we’re going to make an announcement. Every single thing about this deal has been completely backwards.
“If you take one thing away from this as practitioners in the field, please know that if you have a site of value and it doesn’t exactly it the box in that RFI, keep talking, keep showing, keep after it 100%. We would have never submitted this site. It didn’t fit the parameters, but those are just parameters on a piece of paper,” stressed Keifer.
Regardless of anything in writing, there was going to be an announcement.
The impact of this on Baxter was huge. Just the water needs for this project would double the water needs of the entire city.
Baxter had 536 sewer customers and were getting ready to spend millions on their sewer plant. They were going to have to raise rates on all customers. They recently raised water rates also, but not one person has come to Martin to complain about the rate increase.
Teamwork, trust and regionalism
Mayor Martin said he never in his wildest dreams thought he would see a headquarters for a multinational company locate in his town of 1,500 with a $150 million capital investment.
“It really comes back to a team that we have in Putnam County,” Martin emphasized. “It’s absolutely unbelievable that the city of Cookeville – Melinda works for the city of Cookeville – they were gracious and gave her the go-ahead to work with us on everything.”
Keifer said, “The key to this working was trust. Had Mayor Martin and Mayor Porter not been receptive to help, then it could not have moved an inch. The most important thing in this project was the people of Baxter. They had to come out of this hole with better infrastructure, and with good roads and now with better jobs. It couldn’t just be the company that won; it had to be the city of Baxter. Something this large will eat a small municipality in one bite, so our focus became the people. It had to be about the people. The company stuff was going to work itself out, Lyndi’s got them covered, and Cody has them covered. It had to be the people. We had to make sure they were protected in this out of balance that was about to happen with a very big project in a very small town.”
“When you look at the Upper Cumberland, there is a regional approach to everything, and I haven’t seen it in other parts of the state,” said Berrones.
Berrones explained that Keifer became involved early when the Mackie site was being considered, but she came back into the fold when Baxter was chosen. During Berrones’ call to Huddleston about Baxter being chosen, he responded that he had to call one person – Keifer.
“I think regionalism is key here, and everybody in Putnam county came together to see this through,” shared Huddleston.
“I can tell you in my county, it hasn’t always been that way,” explained Keifer. “We know who we are; we are in an exceptional period of leadership. Be okay with whatever seat on the bus you need to sit in at that time, because it can change on any given day.”
“From a Cookeville standpoint, when the county wins, anywhere, everybody wins,” Keifer added. “And that’s true. We don’t just say that, we actually walk the walk. For my leadership to say, ‘Go do whatever is needed’ is commendable of my mayor, city council and city manager.”
As of today, the property transaction has been completed, the site has been annexed, there are billboard agreements in place, zoning has been completed, IDB agreements are in place, TDOT access road agreements are in place.
Porter had one piece of advice for the audience, “Have a good personal relationship with your fellow mayors, elected officials. John (Martin) and I talked more during Thanksgiving than I did to my wife, my daughter and my granddaughter all put together. There were days that he and I might talk 10-12-15 times a day, but that’s because we had a great relationship.
“We trust each other. We admire each other. All of our city and county officials are like that in Putnam County, so I think that’s why we’ve been so successful in Putnam County is that teamwork.”