HP Hood, based in Lynnfield, Mass., closed on the deed to the former Muller Quaker Dairy plant on Friday, paying $54,216,000 to Dairy Famers of America for the facility.

DFA acquired the property from Muller Quaker in December 2015 for $60 million.

As part of the deal, Hood agreed to take over the obligations of Muller Quaker for the property, which includes making payments in lieu of taxes (PILOT) along with paying a variety of fees to Genesee County Economic Development Center.

The GCEDC board has yet to improve a new PILOT agreement for the 363,000-square-foot, state-of-the-art milk processing facility, but is considering providing Hood with more than $7 million in tax abatements over 10 years, with an anticipated total economic benefit to the region of more than $330 million.

Hood will pay GCEDC $1.7 in annual installments of $280,000 over six years, starting with an initial payment delivered Friday at closing.

There is also an annual $1,000 administration fee and a $5,000 annual property maintenance fee to assist with maintenance of the Genesee Valley Agri-Business Park, where the plant is located (next to the Genesee County Fairgrounds on Route 5).

Hood is reportedly planning to add a 100,000-square-foot warehouse to what is already the largest dairy processing facility in the United States.

The plant cost PepsiCo and Theo Muller Group $206 million and Hood is planning to invest significantly more into the plant. Reconfiguring the plant from one that made just Quaker Muller's own take on Greek yogurt and adding the warehouse will create more than 500 construction jobs with a payroll of $26 million. 

While Muller Quaker topped out at 162 jobs created, Hood promises 250 jobs at the plant, with an average annual salary of $47,000.

Hood plans to begin construction this summer and be operational by the first quarter of 2019.

Previously:

• New England's large dairy company, HP Hood, buying former Muller Quaker plant
• DFA paying full tax bill on former Muller Quaker plant while officials wait to hear co-op's plans for production
• There will be jobs at the former Muller Quaker plant, Hyde says, we just don't know when
• Quaker Muller closing, but new dairy processing operation expected to open in plant soon
• County officials get high praise from executives, governor for bringing new yogurt plant to Batavia
• Officials optimistic about yogurt and Genesee County with opening of Muller Quaker plant
• Likely buyer for 'Project Wave' plant is PepsiCo

The plant has been vacant, except for a few maintenance workers, since Theo Muller Group and PepsiCo dissolved their yogurt-making partnership in December 2015. A month later, Dairy Farmers of America, a dairy farmers cooperative, purchased the 363,000-square-foot, state-of-the-art milk processing facility for $60 million.

Since then, DFA has been mum about its plans for the plant, and for 2017, the company wound up paying all of the property taxes due on the two parcels, more than $650,000, because they were not meeting the employment obligations of the PILOT (Payment In Lieu Of Taxes) agreement Muller Quaker received for the project.

Rumors have started circulating weeks ago that DFA planned to sell the plant to a large dairy producer.

Public documents released by the Genesee County Economic Development Center in advance of a meeting next week where new tax incentives will be considered indicate that Hood is the buyer. It is a 170-year-old company that does more than $2 billion in business annually, and is based in Lynnfield, Mass..

Hood is a subsidiary of Catamount Companies. The owner and CEO is John A. Kaneb, who is also a part-owner of the Boston Red Sox.

News of Hood's purchase is good news to local dairy farmers. Both Shelly Stein of Stein Farms and Dean Norton, former NY Farm Bureau president and owner of a dairy farm in Elba, said anything that creates more demand for local milk helps all farmers.

"Anything that can go into that plant and help with the oversupply of raw milk that we have in the Northeast right now, that would be good," Norton said.

Norton said he has met Kaneb a couple of times.

"He's a good guy and it's a pretty solid company," Norton said.

Bill Baskin, owner of Baskin Livestock in Bethany, got his start in the dairy business in Massachusetts, so he is very familiar with Hood and said it's a good, old, old, old company with deep roots in Boston.

The funny story, he said, is that his great uncles had a 700- or 800-cow dairy farm back in the 1940s and they didn't like the price they were getting from Hood for milk, so they started their own bottling plant, which years later they sold.

Both Stein and Norton are DFA members. Norton said he doesn't know, but he would expect that DFA will become the supplier of milk for Hood's operations.

Monica Massey, senior vice president and chief of staff for DFA, said she could not confirm the transaction with Hood.

"We are getting close to finalizing an agreement," she said.

Massey said DFA acquired the plant as a "strategic opportunity" because the region is an important and underserved milk shed.

Asked if DFA would supply milk to Hood, Massey said, "We acquired the facility because we thought it would benefit our member-owners." That is still the goal, she added.

Hood's purchase price for the former Muller Quaker plant has not been released, but GCEDC documents indicate that Hood plans to add another 100,000 square feet to the plant, which is already considered the largest in the United States, for a warehouse.

How much that additional investment will cost is not disclosed in the documents.

While Muller Quaker topped out at 162 jobs created, Hood promises 250 jobs at the plant, with an average annual salary of $47,000.

Hood plans to begin construction this summer and be operational by the first quarter of 2019.

Construction will create 524 jobs with a payroll of nearly $26 million.

The original cost of construction for the plant was $206 million, which is the cost of capital investment still tracked by GCEDC for its accounting purposes.

The GCEDC board will be asked to consider reinstating the PILOT, which will provide Hood with more than $7 million in tax abatements over 10 years, with an anticipated total economic benefit to the region of more than $330 million.

Hood has been expanding into New York and other parts of the United States over the past few years. In 2004, the company acquired Crowley Foods, based in Binghamton. It's also acquired dairy companies in Minnesota and Sacramento, Calif.

Eric Zuber, a local dairy farmer and VP of Upstate Niagara Milk Cooperative, said he hasn't heard what Hood plans to do with the plant, but like Stein and Norton, he believes anything that will "soak up some of the milk supply" is a good thing.

"There sure is a lot of milk around right now," he said. "A little more capacity with the right thing is a good thing. We need more processing capacity. I don't care where it comes from."

Hood and Kaneb, he said, have a good reputation in the dairy industry.

"He’s done a fantastic job with (Hood)," Zuber said. "They know how to manage a milk plant. Whatever they decided to do, I'm sure it's going to be first class."

DFA has yet to submit planning documents to the Town of Batavia and at the County's Ways and Means Committee. Today, Steve Hyde, CEO of the Genesee County Economic Development Center, said there are ongoing negotiations about the future of the plant, but he can't discuss them.

Hyde did say there are businesses interested in acquiring the plant outright and DFA is in negotiations with potential partners, but nothing is settled to date.

"They are fully committed to bringing milk into the plant and sending out dairy products," Hyde said.

There will be jobs in that plant again, Hyde said. It's just a matter of when and what business model either DFA or some other suitor decides to pursue.

Negotiations are ongoing.

DFA acquired the plant, which cost $206 million to build, for $60 million in January.

PepsiCo and Germany-based Muller Dairy formed a joint venture, Muller Quaker Dairy, to create tasty yogurt products designed to capture a portion of the growing Greek yogurt market, though the yogurt produced by the plant wasn't exactly Greek yogurt.

Whether through lack of marketing (either enough of it or the right message), lack of good distribution or lack of consumer interest, the product never caught on (though there was, according to sources, $100 million in first-year sales); the joint venture was dissolved and the plant closed in December 2015, costing about 200 people their jobs.

There are, we are told, still three former Muller employees on site, keeping the plant maintained so that when somebody does decide to do something with it, everything is in working order.

How much money Muller lost on the joint venture isn't known, because Muller isn't a publicly traded company. PepsiCo is, and the company took a $78 million impairment charge in 2015. An impairment charge is a somewhat complex accounting term that can mean a write-off on a loss of fair market value.

With gross sales of more than $66 billion annually and a net profit of nearly $10 billion, the write-down warranted nothing more than a footnote in PepsiCo's 2015 annual report.

The Wave Project, as it was initially known, did receive some subsidies along the way to assist in construction and starting production, but Muller Quaker never qualified for all of the subsidies it signed up for.

The PILOT (Payment in Lieu of Taxes), mortgage tax abatement and sales tax abatement on construction totaled about $11 million, but Muller Quaker never benefited from most of that tax relief. Since the PILOT is spread out over a 10-year span, as a reduction in property tax on the increase in assessed value, with the size of the abatement declining over time, Muller Quaker doesn't benefit for any of the PILOT relief from 2015 onward. The new owners, DFA, or other, could benefit from the PILOT until it expires (or is replaced by a new agreement as part of a new business being established).

From Empire State Development, Muller Quaker was promised $4.5 million in tax credits tied to job creation. As a result of creating 446 jobs in 2013 and 2014 (the number is combined for the two years -- one job in one year warrants credits for that year, and the same job, still in place, counts in the second year, and so on), Muller Quaker received $556,446 in tax credits, not the $4.5 million originally offered.

The company was offered, and received, $995,000 from New York State Homes and Community Renewal.  The grant was based on meeting specific investment and job-creation goals. 

New York State Energy Research and Development Authority (NYSERDA) also made a commitment for nearly $2 million to offset the cost of installing energy-efficient equipment and HVAV measures that would lower costs at the plant. Only $1.2 million had been awarded prior to the plant closing.

The New York Power Authority awarded a 1.3-megawatt grant of power under the ReCharge NY program and the plant used the full allotment of the grant.

A large dairy processing organization is close to closing a deal to purchase 320,000-square-foot plant, which cost PepsiCo and Muller Group an estimated $200 million to build. 

"We expect it won't take long and they will employ lots of folks," Hyde said. "Probably more than Muller Quaker and it will be good for Western New York dairy farmers."

While details of the plant closing are not available, some sources indicate it won't close immediately, even so, right before Christmas is a hard time to hear you might be out of a job soon, Hyde acknowledged.

"It is a sad day, especially this time of year, and we're all very sad about it, but there is a silver lining," Hyde said.

The GCEDC is already working with the Job Bureau to find suitable replacement jobs for Muller Quaker employees, along with job search assistance and transition training, Hyde said. There may be a job fair to assist workers. Hyde noted there are a lot of local job openings right now.

While Pepsi and Muller made a substantial investment in the plant, they did so with the backing of the state and the local IDA. The state promised Pepsi/Muller some $14 million in tax credits, but those tax credits were contingent on meeting specific job creation goals.

Quaker Muller never went beyond its Phase I goals, which was a bit less than 200 jobs, Hyde said, so the company received "only a fraction" of the anticipated tax credits though Hyde did not have the exact amount of tax credits awarded immediately available.

The project was also eligible for $11 million in tax abatements related to the improvement of the former farm field, mostly in the form of a Payment in Lieu of Taxes on the increase in assessed value. Such tax abatements are not a direct subsidy but are only realized if the project is built and the property tax assessment goes up. The next owner, assuming there is one, will inherit the PILOT.

There were also federal grants that have gone into the creation of Genesee Valley Agri-Business Park that did not directly benefit Quaker Muller, but provided infrastructure, such as sewer and roads, to make the plant construction possible.

Hyde said it's impossible to say, at this point, when this dairy processing organization might complete its acquisition of the plant, but he is optimistic the deal will go through. 

UPDATE 6:15 p.m.: Empire State Development has issued the following statement: “Empire State Development will be working with the new plant owner, DFA (Dairy Farmers of America), to restart operations soon.”

UPDATE 6:20 p.m.: Assemblyman Steve Hawley said he was briefed on the plant closing last night and only recently learned of DFA's purchase plans. He's hoping DFA will rehire the displaced Muller workers. "I'm not sure what the future holds, but we're moving forward and I hope this shutdown is short term." 

UPDATE: Statement from DFA: "DFA has agreed to acquire the Muller-Quaker Dairy Plant in Batavia, NY. The acquisition is a strategic one for DFA as it is in an important milkshed for us. This facility creates multiple potential milk handling and dairy manufacturing opportunities. We are currently exploring these."

Previously: Developing: Muller Quaker plant reportedly closing

GCEDC issued this statement a few minutes ago.

“While we are extremely disappointed about today’s announcement by Mueller Quaker Dairy, we are optimistic that the state-of-the-art manufacturing facility will continue to play a key role in the agricultural sector in our region, including remaining a major employer.

“The Genesee Agri-Business Park where the facility is located is a community asset and it continues our strategy of building and marketing sites targeting industry clusters. 

“Regardless of this announcement, we will continue to enhance the infrastructure at the Ag-Park in our efforts to bring new jobs and investment to Genesee County in the agricultural sector.

“Our immediate focus in the meantime is to do everything we can to assist the impacted employees.”

Local photographer Jim Burns is featured for the next three months at Muller Quaker Dairy with some of his photos. 

The Genesee-Orleans Regional Arts Council (GO ART!) rotates photos at the dairy for people that come to visit to take tours and also for employees to view. 

The display will be up until Sept. 30^th. 

More of Jim Burns' work can be found here: Jim Burns Photography

The Genesee County Economic Development Center (GCEDC) and Muller Quaker Dairy are the recipients of the 2014 Northeastern Economic Developers Association (NEDA) Project of the Year Award. The award was formally presented to both entities at NEDA’s Annual Conference on Monday, Sept. 8th in Worcester, Mass.

GCEDC was recognized for fostering the development of the 250-acre Genesee Valley Agri-Business Park in Batavia, which has generated more than $230 million of new capital investment as well as the creation of approximately 230 jobs. NEDA also recognized Muller Quaker Dairy, a $206 million state-of-the-art yogurt manufacturing facility, which employs almost 200 people in the Agri-Business Park in the competitive $6.2 billion U.S. yogurt marketplace.

“On behalf of the GCEDC Board of Directors and staff we are honored to be recognized by NEDA,” said Steve Hyde, president and CEO of the GCEDC. “I want to thank Governor Cuomo for his personal commitment in bringing Muller Quaker Dairy to Western New York and his tireless efforts to improve the economic development climate throughout Upstate New York.”

Muller Quaker Dairy is projected to have a regional impact of approximately $150 million annually on the local agriculture, hospitality and business services sectors. Indirect job creation is projected to add another 750 workers to the regional labor force.

“This project is a great example of public and private sector collaboration especially in significantly compressing the timeline for various government approvals,” said Chris Suozzi, vice president for business development at the GCEDC. “Through the collaboration with Empire State Development, the Greater Rochester Enterprise the Buffalo Niagara Enterprise, National Grid, Genesee County, as well as the City and Town of Batavia, we were able to make the case that Batavia and the Agri-Business Park was the perfect location for Muller Quaker Dairy."

Muller Quaker Dairy is a joint venture between one of Europe’s largest dairy processors, Germany-based Theo Muller and New York-based PepsiCo. It is the largest manufacturing plant ever to open in Genesee County.

The NEDA Project of the Year award recognizes a major economic development project based on job creation and other direct economic impacts; capital investment; leveraging of development resources; use of public/private and/or intergovernmental partnerships; benefits to the surrounding community and/or environment; innovation; design excellence; and transportation considerations.

Genesee County Emergency Services and the Town of Batavia Fire Department conducted a confined spaces drill yesterday at the Muller Quaker Dairy plant.

Nationally, from 80 to 100 people die every year in confined space accidents and even rescues can be difficult and dangerous.

Photos submitted by a reader.

"Promotions are playing a role," Barb Yehling, chief marketing officer at Muller Quaker Dairy, told Foodnavigator-USA.com. "However, at the end of the day it’s product quality and taste that matter to consumers. Again, this is where Müller yogurt excels."

Yehling said the company is focused on innovation and meeting unmet needs to bring to the American public a Greek-style yogurt that is fun and flavorful.

Kosher, as in certified by a rabbi.

That means no animal -- except fish -- products are used in the plant's food production, as in no cow or pig parts to make gelatin.

A few days ago as I passed through the Tops check-out line with six containers of Frut Up (I really wish they would sell this in a six-pack container), the cashier said, "did you know there's tilapia in this?"

Heck, up to that point, I didn't even know what tilapia was. Some sort of fish, I recalled dimly.

When I got home, I read the label a little closer. Yup, tilapia is listed. So is "kosher gelatin."

If you know your history of Jell-O (and who doesn't in Genesee County), you know gelatin was originally made with from pork and pork skins, horses, and cattle bones or cattle hides. 

Those are all animals that in a kosher kitchen can't mix, even a single molecule.

As it turns out, you can also make gelatin from tilapia, and since observant Jews can mix fish and dairy, if you want fruity gelatin with your yogurt, and you want it to be kosher, you need tilapia to do it.

Rabbi Doctor David Sheinkopf inspected the Muller Quaker plant in Batavia and as a result, the yogurt products Frut Up and Corner can be sold as "Certified Kosher," according to Scott Gilmore, spokesman for PepsiCo.

"Taste is important and we use the best ingredients," Gilmore said. "We aim to make the best tasting yogurt on the market, but consumers told us it (kosher yogurt) was important to them and we wanted to honor that request."