Staters Taking Off

San Bernardino County Sun03/13/04

STATERS TAKING OFF Market chain will make its new home at SB airport

By JIM STEINBERGBusiness EditorSaturday, March 13, 2004 – SAN BERNARDINO – Stater Bros. Markets announced plans Friday to purchase 160 acres at San Bernardino International Airport and spend more than $200 million for a new headquarters and distribution center.“This is just the beginning of tomorrow for our community economically,” Rep. Jerry Lewis, R-Redlands, told an audience of 150 community leaders, public officials and top Stater Bros. employees Friday afternoon inside the normally empty San Bernardino International terminal. “This is a really defining moment for San Bernardino,” said Mayor Judith Valles, adding her praise at the event Stater Bros. officials called the “biggest economic-impact announcement in the history of the Inland Empire.” With a payroll of $130 million, the Stater Bros. development will contain the largest distribution center under one roof, more than 40 covered acres, in Southern California, said Jack Brown, Stater Bros. chairman, president and chief executive officer. Stater Bros. has reached preliminary agreements with the Inland Valley Development Agency and Hillwood Investments for the acquisition of land that will move Stater Bros. headquarters from Colton to San Bernardino. A final agreement might be ready for board approval in as little as two weeks, officials said. Construction will start next winter. Friday’s event, where American flags, cake and miniature Stater Bros. trucks were passed out, was unusual in the world of economic development because it was held before legal documents were signed. “Mr. Brown wanted to throw a party,” said Colton Councilman John Mitchell, an Inland Valley Development Agency board member. Initially, the new distribution center will occupy 1.7 million square feet. When finished, it will encompass 2.1 million square feet, employ 2,500 and have an annual payroll in excess of $130 million. The new headquarters office building will be 60,000 square feet, twice the size of the current building in Colton, which is about seven miles away. The new San Bernardino building will consolidate eight warehouses, most now in and around Colton and Redlands. The new, high-tech warehouse will have hundreds of skylights to use available light and reduce electricity expenses, Brown said. UNDER ONE ROOF Because the formerly scattered warehouses will be under one roof, Brown said, the company will be able to more efficiently move warehouse employees to where they are needed. Construction of the building will take about two years, employing an additional 500 to 600 workers in the process. The move will take about six months and should be finished in summer 2006, in time for the celebration of Stater Bros. 70th year in business, Brown said. Stater Bros. will join the 675,000-square-foot Kohl’s Corp. distribution center and the $1.2 million-square-foot Mattel Inc. distribution center at Hillwood’s AllianceCalifornia project. “The arrival of Kohl’s proved that we, including the city and the IVDA, could do it. Mattel made us all a real daily player in the marketplace. And now Stater Bros. solidly seals the foundation of what is a new economic engine for this region to build on for decades to come,” said Lee Orr, vice president of Hillwood Investments, the master developer for 400 acres of Inland Valley Development Agency property. Orr said the Stater Bros. relocation will speed the development pace for the 4 million to 4.5 million square feet that remain to be developed in Alliance California. Most of the land still available for development is west of Tippecanoe Avenue or on what is now the Palm Meadows Golf Course. The San Bernardino International site was chosen from among more than 20 studied by Stater Bros. over the last five years. Among the criteria were access to an interstate highway and a land site of 160 acres. Stater Bros. looked in Colton for its expansion needs but could not find the land. An unspoken criterion was that it needed to be in San Bernardino County or Riverside County, where the company could maintain its average 42-mile haul between the warehouse and 157 stores. Calling this distance the shortest in the industry, Brown said it is a big reason for Stater Bros.’ success. BUSINESS DECISIONS Several years before serious negotiations began, Brown, a San Bernardino native, made his interest in a site at the former Norton Air Force Base known to some Inland Valley Development Agency board members. On Friday, Brown said the decision to move there was first of all based on business decisions. It maintains … and improves upon … the short haul, he said. “When you are responsible for 14,500 people (Stater Bros. employees), it really is a heavy responsibility. And I never put it down. So I have to make decisions that secure their jobs and their futures. “However, being able to do that, and at the same time let my heart direct this, is really special,” Brown said in an interview. Don Rogers, interim executive director of the Inland Valley Development Agency, said that all the major deal points of the agreement have been agreed upon. These points must now be put into a written agreement for approval by the Inland Valley Development Agency board. Additionally, Stater Bros. has negotiated a separate agreement with Hillwood to release its right to purchase whatever land Stater Bros. would need. The Inland Valley Development Agency portion of the Stater Bros. parcel amounts to about 30 percent of the land that Hillwood has purchase rights to. As part of the agreement, Stater Bros. will pick up 30 percent of of Hillwood’s future development costs, said Tim Sabo, attorney for Inland Valley Development Agency. Stater Bros. must also negotiate the purchase and in some cases relocate several existing tenants on the land Stater Bros. needs, include Norton Credit Union and Smart Start Child Development Center. Bruce D. Varner, attorney for Stater Bros., said preliminary discussions have been conducted with most of the parties that will need to move. Another portion of the Stater Bros. property is to be assembled through a land swap between the IVDA and its sister agency, the San Bernardino International Airport Authority. Stater Bros. will become the first Fortune 500 company based in San Bernardino. In addition to the acquisition of the 160 acres, Stater Bros. plans to lease 47 acres near the San Bernardino International runway for trailer storage, Brown said.