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Tax Breaks, Wage Credits, Low-Cost Bonds Spur South County Boom

More companies are moving to Otay Mesa, thanks to lower cost land and a variety of government incentives geared to spur commercial development.

According to the Otay Mesa Chamber of Commerce, seven manufacturers have relocated or announced plans to move to the southern part of the county in the past year.

“This is one of the last areas of the county where you can build a factory like the one we did,” said Olivier Fischer, president of Cantare Foods, which recently completed construction of a 48,000-square-foot plant to produce gourmet cheeses and other specialty food products.

“The (low) costs of putting up the building here, plus the tax advantages that we received by building in an enterprise zone, made a lot of sense to us.”

Cantare is in the process of moving from two existing buildings in Miramar. Fischer said his business needed more room to expand. Constructing a new plant rather than retrofitting an existing building was far cheaper. In 2003, he purchased land in Otay with the idea of eventually moving.

In addition to tax breaks and wage credits provided by the city of San Diego that come with relocating to an enterprise zone, a geographically designated area approved by the state, Cantare saved considerable costs by issuing industrial bonds to finance the estimated $10 million it will spend on construction and new equipment.

The bonds carry an interest rate between 5 and 6 percent, more than two points below the prime rate, said Cantare Chief Financial Officer Paul Saunders.

Founded in 1992, Cantare has seen revenues increase 20 percent annually, said Saunders, who declined to reveal dollar figures.

Fischer already plans to add 24,000 square feet to bring the plant’s size to 72,000 square feet.


Heading South

The company is consolidating operations from Irwindale, east of Los Angeles, where 40 employees now work.

Once the first phase of the relocation is complete, involving 56 employees this year, the company said it would move its Irwindale line and its 40 jobs to the Otay plant, Fischer said.

The contractor for the Cantare project was Rancho Santa Fe-based TFW Construction/Development Inc. Cantare’s customers include some of the nation’s largest warehouse stores and retailers, including Costco, Ralphs, Safeway and Vons, Sam’s Club and Trader Joe’s.

In December, Kojima America Corp. opened a 104,000-square-foot manufacturing plant in Otay Mesa.

“This is a very good place to supply our parts and distribute them to our final customers. We have three of them in Tijuana,” said Toshiyuki Koike, the plant’s general manager, who declined to reveal the names.

Kojima makes components for plasma televisions, and supplies some of the largest TV manufacturers in Tijuana, and one customer in this country.

The company, which has another plant in Anaheim, has 39 employees at the Otay plant, but in May it should increase that number, Koike said.


An Enterprising Idea

Last year, the city consolidated two separate enterprise zones in Otay Mesa that were expiring.

While reinstating the zoning designations, the city increased the zone’s size to 34,000 acres, said Lydia Moreno, the city of San Diego’s community development coordinator.

Among the other manufacturing businesses that have recently opened in the area are Kieran Labels, a maker of roll and sheet label products used by a variety of suppliers and distributors in the printing industry. The firm has about 400 customers, including some of the world’s largest companies , Costco, Dell, Home Depot, Samsung and Sony.

Other manufacturers that opened recently in the area are Mission Imprintables, a wholesale distributor of apparel and imprinted products; U.S. Medical Instruments, a medical device manufacturer; and PG Films, a Mexican-based manufacturer of sheet roll plastic.

European Panel Products, which makes veneer panel components for architectural and furniture applications, is now based in El Cajon, but is moving to Otay Mesa this summer.

Fischer of Cantare Foods said the presence of the enterprise zone and its benefits was a factor in relocating to the area. So was the proximity to a market where many current employees now live.

Most of the line workers at Cantare’s Miramar plant live in the South Bay, and the move is certainly welcomed by them because it reduces their commute times, Fischer said.

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