Cheese factory to be constructed in Bandon

By: Lee Fehrenbacher - May 29, 2012
Source: Daily Journal of Commerce

Years have passed, but the day that Bandon lost its cheese-making facility is not forgotten, Mayor Mary Schamehorn said.

“It was extremely sad,” she said. “It has been there for years, and years, and years … then they tore the whole building down and (then we) had nothing but a vacant lot. It was the biggest tourist attraction in Bandon outside, I guess you could say, the Pacific Ocean. People still today come in and say, ‘Where’s the cheese factory? What happened to the cheese factory?’ ”

In 2002, just two years after purchasing the Bandon Cheese Factory, the Tillamook County Creamery Association ceased operations. Retail business continued there for three more years before it stopped too. The company laid off its employees, let the buildings fall into disrepair and finally demolished the highly visible facility along U.S. Route 101.

But now developer Greg Drobot is planning to break ground next month on a new, $2 million, 6,000-square-foot cheese factory at a Bandon site called the Face Rock Creamery. It wasn’t easy, however.

“The banks are extremely difficult to deal with if you’re a startup, and unless you’re a business with a long track record of financials it is damn near impossible to get a loan,” he said.

Drobot said he wasted two months trying to secure a loan, first from Umpqua Bank and then from Sterling Savings Bank. Both attempts ended in frustration, he said.

“It was a lot of late nights bouncing ideas off each other that we finally came up with the capital stack that we have,” he said.

Now loans are secured from three sources: a mezzanine lender, the Port of Bandon and Business Oregon. But perhaps the most important piece to the financial puzzle is a deal with the city of Bandon to lease the future factory’s land for $40 per month for the next 20 years, with three 10-year renewal options.

“If I wasn’t able to get the preferred lease from the city, I wouldn’t be able to do it,” Drobot said. “That’s a tremendous amount of money I would have had to put down.”

At the end of 2011, the city of Bandon used urban renewal money to purchase the creamery association’s two-acre parcel for $500,000. The lot was the missing link in a section of approximately 16 acres of commercial and industrial property the city owns to the south and west.

The city is hoping that the cheese factory will anchor its plan to create a large rest stop and tourist center for coastal travelers.

“Anyone traveling up the Oregon coast or down the Oregon coast goes right through Bandon,” said Matt Winkel, Bandon city manager.

The problem up until now, Winkel said, was a lack of parking. But the planned rest stop is expected to be large enough to accommodate RVs and tour buses. Also, the site is adjacent to the central business district, so it will be a sort of launch point for visitors to enter the city.

Winkel said another major financial holdup was that the city previously would not have been able to afford yearly maintenance for new restroom facilities. Winkel said the new creamery will cover those expenses.

The city will also receive 1 percent of all creamery sales exceeding $1 million and 2 percent of sales exceeding $2.5 million. The city recently submitted an application for $2 million in urban renewal money to begin work on the rest stop.

Planning the financials of a creamery has also come with a crash course in cheese-making for Drobot.

“I was doing some due diligence and it turned out that handmade, high-end cheese … there’s quite a bit of margin in it,” he said. “It’s an intricate specialty business, but it’s very profitable.”

Through a chance meeting, Drobot started working with former Bandon Cheese Factory cheese maker Joe Sinko, and together they started ironing out details. Drobot said they plan to make a pasteurized cheddar cheese from cow’s milk that they will source from the nearby city of Coquille. The cheese will likely sell for $8 to $12 per pound depending on its sharpness and style.

But don’t expect to find Drobot making the cheese.

“Luckily I’m not going to be the one that’s going to be relied on,” he said. “But I have learned a significant amount about fat and protein levels … it’s a real science that tastes good.”