Business / Economy

City agrees to incentives to keep Teknova, allow expansion, increase local jobs

Bioresearch company has plans to double in size and bring more local jobs to the county
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It was like watching a race to the finish line as council members verbally jostled one another to be the first one to make the motion on the resolution to approve business expansion incentives that would pave the way for Teknova to nearly triple its footprint in the city and double its workforce.

In an oft-repeated slogan during the Oct. 17 meeting, more than one council member hailed, “Hollister is open for business,” as they gave glowing testimony on what the Hollister-based bio research company’s present and future contributions mean to the city.

Development Services Director Bryan Swanson had the easiest sales pitch ever when he told the council what the approval of incentives for Teknova’s expansion would mean for Hollister and job seekers wanting to avoid the grinding commute every day.

“We have an exciting opportunity for a private-public partnership with a great business within Hollister,” he began. “One of the city’s nine economic principles is to set targets for job creation and retention by creating opportunities for small businesses and entrepreneurs to gain support and start companies with a strong collaboration between the public and private sector.”

Swanson said Teknova is a well-respected manufacturer of specialty biotechnology. As reported in BenitoLink, the company moved to Hollister in 2004. It currently employs approximately 100 people in a 45,000-square-foot facility. The company wants to expand by an additional 80,000 square feet.

“Teknova is being courted to relocate and expand operations elsewhere,” Swanson said. “Teknova identified the recent increase in impact fees as a reason to consider relocation.”

Because the partial widening of Highway 25, at a cost of $22.5 million, has been added to the most recent update of the Traffic Impact Fee Program, Teknova submitted a memo requesting seven incentives in order to make it economically feasible for the company to stay in Hollister.

Those incentives include:

  • Defer traffic impact fee five years, after which Teknova will pay the fee over the following 20 years
  • A waiver of 1 percent traffic impact fees linked to job creation, up to a maximum of five percent annually
  • Expedite plan review and approval
  • Maximize use and productivity of a parcel of land
  • Waive building department fees
  • Establish deferred, zero or low-interest loans for land purchases and construction
  • Maximize local, state and federal incentive programs and tax incentives

The resolution spelled out that the city would amend the January 2016 Transportation Mitigation Fee Nexus Study that established tiered impact fees for new industrial manufacturing developments that generate local jobs and redirects commute traffic away from peak paths of travel on Highway 25 and Highway 156.

In addition to all the incentives, the city also agreed to explore a partnership with Teknova and local business stakeholders on the development of a local Innovation Hub (IHUB), and enhanced education training and pilot programs with Gavilan Community College and nearby education institutions.

Phil Fortino, branch manager for Hollister’s Rabobank, said the problem in the city is that 60 percent to 70 percent of the workforce leaves town every day to go to work.

“You can’t have a community if two-thirds of the workforce is leaving,” he said. “They can’t help out in the classroom during the day. They can’t have a business lunch locally. They just can’t be part of the community. They get up way too early and come home way too late. What you need are good jobs in San Benito County — jobs like Teknova brings.”

Fortino said the area has lost numerous businesses, such as National Vitamin, LifeSpark, Vacation Air Shell Industries, California Fiberglass, and others to surrounding communities. He urged the council to do whatever it takes to not only keep Teknova in the county, but to find other businesses outside the area to come to the county and create new jobs.

“We want you to send a message that Hollister, and San Benito County, is open for business,” he said.

Fortino received a round of applause, setting the tone for the following speakers, as Ted Davis, the founder of Teknova, came up and thanked those from the city and council who had come out to visit the facility. Davis told of how the company was founded in 1996 in Half Moon Bay, and came to Hollister when the company outgrew its facilities there.

“We’re growing at about 55 percent over the last year, and over the last 18 months we’ve gone from 55 employees to 105,” he said. “We’re trying to build a facility here. We feel like we’re part of the community and it is our home.”

Davis said Teknova will most likely double in size over the next two years. He said the company brings executive-level and manager-level jobs to the community. He said that every summer, the company brings in high school students or college students coming home to intern in its laboratories. Some of the high school students have gone on to U.C. Berkeley, Princeton and Columbia.

“We encourage our employees to get involved with all the nonprofits here,” Davis said. “We support Chamberlain's, YMCA, United Way, Heritage Foundation, the Olive Festival, and the homeless shelter.”

Richard Goozh, chief financial officer of Teknova, said he helped formulate the proposal in order to build a partnership between the city and the business. He said the real estate decisions Teknova makes are the underpinning of the company’s cost structure for many years to come.

“Because of that, it’s impossible for us to ignore other opportunities outside of Hollister despite the fact that this has been an incredible place for the company to grow the last 12 years,” he said. “We’d like to see another 12, and even another 36 years in Hollister, but we do see turnkey opportunities to the north where we don’t have to build, we don’t have to figure out the financing, and the developers are offering us several million dollars in cash to put into our business to bring it there. We can do it very quickly and easily without having to figure out the land deal and all of the fee structures.”

Despite all those incentives, however, Davis said Teknova’s primary motivation is to figure out how to make it work in Hollister. He said he wanted to highlight the fact that there are around 100 employees at Teknova, and that number would double with the expansion.

“Seven out of 10 of our workforce live locally,” he said. “Our biggest cost to expansion is the traffic impact fees, which is interesting because we’re taking traffic off the roads. Specifically, those roads that the impact fees would be going to.”

Goozh pointed out that the traffic impact fees are one-time fees that go into the city’s coffers. He said that while he appreciated the way the city was fiscally smart in the way it keeps a balanced budget and strategic spending, he said Teknova would create revenue every year.

“It’s likely we’ll create more tax revenue for Hollister and San Benito County every year than the one-time fees brought in at the front end,” he said. “We’ve done some calculations and we see that, first of all, the vast majority of the revenue that's generated by Teknova comes from outside the community. Teknova does business nationally and internationally. More than half of that revenue stays inside the community through salaries, through our work with many contractors and vendors.”

Patrick Ellis, program director of Chamberlain’s Children Center, spoke about Teknova’s support of Hollister’s nonprofit organizations and noted that the company has supported Chamberlain’s for a number of years.

“They’ve provided volunteers at our organization and have served as board members,” he said. “They’ve provided thousands of dollars in sponsorships over the years. They’ve provided a special touch with Chamberlain’s with birthday parties for our children and opportunities through sponsorships of outings and field trips. They also contribute to our employee recognition program, which has been instrumental in raising moral.”

Ellis said that because of the relationship with Teknova there have been opportunities to foster youth to find employment at the company.

“Ted has given them opportunities that wouldn’t have otherwise been there,” he said.

Bob Tiffany, owner of Tiffany Motor Company, and president of the San Benito County Business Council, said Teknova is a great company with wonderful people and a tremendous success story.

“It’s everything we want in San Benito County,” he said. “This coming election there is a measure (W) to extend the sales tax and the Business Council supported that. I think it’s needed for the city, but long-term what would help the city and the county is more revenue from sales tax and from company growth and the jobs Teknova is offering. We’ve been hearing the controversy about growth, but no one, I would think, would argue with this kind of growth. This is growth with good-paying, quality jobs. This is what this community desperately needs.”

Tiffany said this move is an exciting example of what can be done in the city.

“I think they’ve (city staff) come up with some creative ideas that’s something that can not only help Teknova in this expansion project, but also set an exciting example of what can be done in this city and can be used by other existing businesses, as well as attracting similar businesses into this community,” he said.

Councilman Ray Friend commented that he was lucky enough to spend a couple of hours visiting Teknova.

“Now I know more about biotechnology media than I need to, but I was really impressed that this is happening in Hollister,” he said. “There are people all over the world who use these products, and they know about Hollister. That’s the kind of businesses we want. This sets the groundwork that I think we’re looking for to start getting companies to realize that Hollister is open for business.”

Councilman and Vice Mayor Victor Gomez said he appreciated the company’s spirit in giving back to the community.

“What we have here today is different, innovative and it’s something we needed to do to attract and retain business,” he said. “What was highlighted by Ted and others are the traffic impact fees and the traffic, in general. I’m one, as Phil Fortino indicated, of the 60 percent that commutes outside the city for work. I’d rather not, but I have to. It does exactly that: it takes traffic off of Highway 25.”

He commented that he and Councilwoman Mickie Luna visited Teknova recently and he was surprised that he bumped into at least 15 people he knew. He thanked Teknova for employing them and what he considered a “slam dunk” proposition.

Luna followed Gomez by saying he should have stayed for the tour because she got hugs along the way.

“I was so proud to see a young woman who graduated from San Jose State, and she was part of our New Life Youth Council and we supported her with every scholarship possible,” Luna said. “Today, she’s one of your employees.”

Mayor Ignacio Velazquez thanked county supervisor-elect Mark Medina for contacting him about Teknova’s situation and the perception that Hollister was anti-business. He said the next day he and staff met with Teknova and he told them that Hollister is not anti-business, and then asked them what they needed in order to stay.

“I have never seen any business turned away in our community,” he said. “What we have now is the ability to help businesses because we are doing better financially. That’s the difference. Impact fees and these other fees are not waived. We at the city have to cover those costs. It’s important when we have companies here providing good-paying jobs to stay and create more jobs. That’s what we’re working towards with those dollars that we have (in reserve) and that’s why those dollars are so precious to us. Now, we can start investing back by bringing in these companies and provide these high-paying jobs.”

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John Chadwell

John Chadwell is a BenitoLink reporter and an author. He has many years experience as a freelance photojournalist, copywriter, ghostwriter, scriptwriter and novelist. He is a former U.S. Navy Combat Photojournalist and is an award-winning writer who has worked for magazine, newspapers, radio and television. He has a BA in Journalism and Mass Communications from Chapman University and underwent graduate studies at USC Cinema School. John has worked as a script doctor and his own script, God's Club, was released as a motion picture in 2016. He has also written eight novels, ranging from science fiction to true crime that are sold on Amazon. To contact John Chadwell, send an email to: johnchadwell@benitolink.com.